Long, strong, indexed property income
VALUE AND INDEXED PROPERTY INCOME TRUST PLC
Annual report and accounts 2024
2
Value and Indexed Property Income Trust PLC
• Annual Report and Financial Statements 2024
100
%
96
%
rent index-related
71
%
RPI-linked
Rent collection
Leases
Debt
Total property return
Rent indexation
EPCs
Property yield
Annual dividend growth
Long, strong, indexed property income
97
%
EPCs rated A-C
11.6 years
weighted average unexpired
lease length to break
35
properties -
38
leases
3.9
%
average rate
6.6
%
P.A over 37 years
(RPI 3.7
%
)
-1.8
%
over 1 year
(Index -1.1%)
+3.4
%
P.A. over 5 years
(Index +0.7% P.A.)
6.6
%
net initial property yield
6.9
years maturity
35
%
loan to value
55%
income from top five tenants
+7.1
%
P.A. over 10 years
(Index +5.0% P.A.)
3
Value and Indexed Property Income Trust PLC
• Annual Report and Financial Statements 2024
Value and Indexed Property Income Trust PLC (VIP or the Company) is an investment
trust company listed on the London Stock Exchange. It invests directly in UK commercial
property to deliver long, strong, index-related income. Its performance benchmark is
the MSCI UK Quarterly Property Index, the main benchmark for commercial property
performance. OLIM Property Limited is the Investment Manager.
VIP’s dividend per share has risen every year
since 1986 when OLIM’s management began.
It has risen by 956% against the Retail Price
Index rise of 281%. Three interim dividends
of 3.2p each were paid on 27 October 2023,
26 January 2024 and 26 April 2024. The
targeted total dividend for the full year is 13.2p
(+2.3%). Our medium term dividend policy is
for increases at least in line with inflation,
underpinned by VIP’s index-related property
income. The dividend yield at 31 March 2024
was 7.7% (2023: 6.3%).
VIP’s property portfolio delivered a total return
of -1.8% over the year against -1.1% for the MSCI
UK Quarterly Property Index. Over the past five
years, the VIP property return was 3.4% p.a.
(Index 0.7% p.a.), over 10 years it was 7.1% p.a.
(Index 5.0% p.a.) and over 37 years it was 11.0%
p.a. (Index 7.7% p.a.).
Borrowings
31 March 2024
31 March 2023
31 March 2022
Average interest rate
3.9%
3.9%
5.6%
Total loans (loan to value)
£50 million (35%)
£50 million (32%)
£57 million (30%)
Loan maturity
6.9 years
7.9 years
6.2 years
VIP property portfolio performance record over 37 years to 31 March 2024
-2
0
2
4
6
8
10
12
1 year
3 years
5 years
10 years
20 years
37 years
Total Annualised Returns %
VIP property
RPI
MSCI UK Quarterly Property Index
-1.8
%
-1.1
%
4.3
%
2.9
%
1.0
%
8.9
%
3.4
%
0.7
%
6.1
%
7.1
%
4.3
%
5.0
%
3.7
%
8.1
%
5.5
%
11.0
%
7.7
%
3.7
%
VIP’s balance sheet and revenue account were significantly strengthened in June 2022 by
repaying the 9.375% 2026 Debenture Stock early, increasing an existing loan at an interest rate of
3.5%, and extending its repayment date from 2031 to 2033.
Over the past two years, as the table below shows, the average interest rate on VIP’s borrowings
was cut from 5.6% to 3.9%, the loan to value ratio rose from 30% to 35% and the average loan
length rose from 6.2 years to 6.9 years.
4
Value and Indexed Property Income Trust PLC
• Annual Report and Financial Statements 2024
Financial calendar
27 October 2023
First quarterly dividend of 3.2p per share for the year ended 31 March 2024
16 November 2023
Announcement of Half-Yearly Financial Report for the six months to 30 September 2023
26 January 2024
Second quarterly dividend of 3.2p per share for the year ended 31 March 2024
26 April 2024
Third quarterly dividend of 3.2p per share for the year ended 31 March 2024
12 June 2024
Announcement of Annual Financial Report for the year ended 31 March 2024
11 July 2024
Annual General Meeting, Edinburgh (12.30pm)
26 July 2024
Final dividend of 3.6p per share payable for the year ended 31 March 2024
25 October 2024
First quarterly dividend payable for the year ending 31 March 2025
November 2024
Announcement of Half-Yearly Financial Report for the six months ending 30 September 2024
31 January 2025
Second quarterly dividend payable for the year ending 31 March 2025
Over the year, VIP strengthened and upgraded its portfolio by selling seven riskier properties,
the last four Stonegate pubs, two short let petrol stations and an overrented convenience store,
for £13.25 million, above valuation and at a net yield of 7.5%. The sales proceeds were invested in
three long-let leisure properties in East Anglia and the South-East at a net yield of 7.8%, rising to
8.5% in May 2024. All have annual RPI-related rent increases.
The intended retail investor in the Company is a retail investor who is seeking long-term (at
least five years) real growth in dividends and capital value from investing in directly held UK
commercial property, plus cash or near cash securities, pending re-investment. The Company
changed its investment policy and its name from Value and Income Trust PLC in January 2021.
5
Value and Indexed Property Income Trust PLC
• Annual Report and Financial Statements 2024
CONTENTS
Strategic Report
Chairman’s Statement
8
Manager’s Report
10
Business Review
32
Governance Report
Directors’ Details
44
Directors’ Report
45
Directors’ Remuneration Report
54
Statement of Corporate Governance
58
Statement of Directors’ Responsibilities
66
Report of the Audit and Management Engagement Committee
67
Independent Auditor’s Report
71
Financial Statements
Group Statement of Comprehensive Income
82
Company Statement of Comprehensive Income
83
Group Statement of Financial Position
84
Company Statement of Financial Position
86
Group Statement of Cashflows
88
Company Statement of Cashflows
89
Group and Company Statement of Changes in Equity
90
Notes to the Financial Statements
91
Additional Information
Property record over 37 years
124
List of properties
126
Alternative Investment Fund Managers Directive
128
How to Invest in Value and Indexed Property Income Trust PLC
130
Glossary
131
Notice of Annual General Meeting
132
Contact Information
137
Stoke-on-Trent
Strategic
Report
7
8
Value and Indexed Property Income Trust PLC
• Annual Report and Financial Statements 2024
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.
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).
Forecast VIP rental income growth over five years
0
1
2
3
4
5
CPI 0%
CPI 1%
CPI 2%
CPI 3%
CPI 4%
CPI 5%
% p.a.
2.6%
2.9%
3.3%
3.6%
3.9%
4.1%
9
Value and Indexed Property Income Trust PLC
• Annual Report and Financial Statements 2024
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. As the table above shows,
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 on pages
115 to 121. 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
on pages 132 to 136 of this 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.
John Kay
Chairman
11 June 2024
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
VIP property portfolio - sector weightings since 2014
10
Value and Indexed Property Income Trust PLC
• Annual Report and Financial Statements 2024
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 March 2024
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.
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.
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
UK commercial property – % growth rates to March 2024
Source: MSCI UK Quarterly Property Index March 2024 - Standing Investments
* Annualised
Louise Cleary and Matthew Oakeshott
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
11
Value and Indexed Property Income Trust PLC
• Annual Report and Financial Statements 2024
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
Comparative investment yields – End December (except 2024 end March)
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.
As the chart above shows, 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.
MSCI UK Monthly Property Index vacancy rates %
All Property Types
Retail
Office
Industrial
0
5
10
15
20
25
2009 2010
2011
2012
2013
2014
2015 2016
2017
2018
2019 2020 2021 2022 2023 Jan
2024
Feb
2024
Mar
2024
Source: MSCI UK Monthly Property Index March 2024
12
Value and Indexed Property Income Trust PLC
• Annual Report and Financial Statements 2024
MANAGER’S REPORT
CONTINUED
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.
Milton Keynes
13
Value and Indexed Property Income Trust PLC
• Annual Report and Financial Statements 2024
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.
MSCI UK Monthly Property Index composition 1989 to 2023
Retail
Office
Industrial
Other
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
1989
1993
1998
2003
2023
2018
2013
2008
Source: MSCI UK Monthly Property Index March 2024
Retail 38%
Office 43%
Industrial 19%
Other <1%
Retail 21%
Office 22%
Industrial 44%
Other 13%
14
Value and Indexed Property Income Trust PLC
• Annual Report and Financial Statements 2024
MANAGER’S REPORT
CONTINUED
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.
York
15
Value and Indexed Property Income Trust PLC
• Annual Report and Financial Statements 2024
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%.
Newport
16
Value and Indexed Property Income Trust PLC
• Annual Report and Financial Statements 2024
MANAGER’S REPORT
CONTINUED
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.
Ashford
17
Value and Indexed Property Income Trust PLC
• Annual Report and Financial Statements 2024
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.
18
Value and Indexed Property Income Trust PLC
• Annual Report and Financial Statements 2024
MANAGER’S REPORT
CONTINUED
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.
Real GDP (Q4 2019 = 100)
75
90
95
100
105
110
Q4 2019
Q4 2020
Q4 2021
Q4 2022
Q4 2023
US
UK
85
80
Euro area
Source: Eurostat, ONS, BEA
19
Value and Indexed Property Income Trust PLC
• Annual Report and Financial Statements 2024
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
output prices
Producer
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.
Goods and services inflation UK CPI, YoY %
-3
3
6
9
12
15
2000
2006
2012
2018
2024
Services
Goods
0
Source: ONS
20
Value and Indexed Property Income Trust PLC
• Annual Report and Financial Statements 2024
MANAGER’S REPORT
CONTINUED
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.
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,
as the chart below shows:
Japan
0%
5%
10%
15%
20%
25%
Canada
Germany
US
France
Italy
UK
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.
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.
Source: OBR, OECD, LSEG, FT calculations
28
32
34
36
38
1950
70
30
80
90
2000
10
20
30
OBR forecast
Source: OBR
UK tax revenue as a % of GDP
Index-linked bond percentages
21
Value and Indexed Property Income Trust PLC
• Annual Report and Financial Statements 2024
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%, as the chart below shows:
UK distribution of mortgage product by type or mortgage
Floating rate
Fixed rate, two years or fewer
Fixed rate, more than two years
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
2011
2013
2015
2017
2019
2021
2023
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.
Average interest rates %
2016
2018
2020
2022
2024
6
5
4
3
2
1
0
New mortgage advances
All mortgages
Source: Bank of England
Source: Bank of England
22
Value and Indexed Property Income Trust PLC
• Annual Report and Financial Statements 2024
MANAGER’S REPORT
CONTINUED
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.
23
Value and Indexed Property Income Trust PLC
• Annual Report and Financial Statements 2024
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.
24
Value and Indexed Property Income Trust PLC
• Annual Report and Financial Statements 2024
MANAGER’S REPORT
CONTINUED
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.
Retail Price Index -
71%
(26 tenancies)
Consumer Price Index -
11%
(6 tenancies)
Fixed increases -
14%
(5 tenancies)
Open market -
4%
(1 tenancy)
Indexed income review pattern by contracted income
71%
11%
4%
14%
25
Value and Indexed Property Income Trust PLC
• Annual Report and Financial Statements 2024
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.
Contracted income by tenant %
Marks & Spencer
HM Government and
Local Authorities
Ten Entertainment Group
Premier Inn
Sainsbury’s
Park Resorts
Co-operative Group
Virgin Active
Kier Group
Hollywood Bowl
Shepherd Neame
MKM Building Supplies
Winterbotham Darby
Arla Foods
Halfords
Tesco
Pizza Hut
Starbucks
Screwfix
Brake Brothers
18%
12%
10%
8%
7%
6%
5%
5%
5%
5%
4%
4%
3%
2%
1%
1%
1%
1%
1%
1%
26
Value and Indexed Property Income Trust PLC
• Annual Report and Financial Statements 2024
MANAGER’S REPORT
CONTINUED
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
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%
Top 10 properties by capital value
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.
Peterborough
27
Value and Indexed Property Income Trust PLC
• Annual Report and Financial Statements 2024
Supermarkets -
29%
Industrial / Warehouse -
28%
Bowling and Health Club -
19%
Hotels -
9%
Other -
9%
Pubs -
6%
Capital value % by sector weighting
29%
6%
9%
28%
19%
9%
Contracted income by lease expiry % (if all break options exercised)
25-30 years
20-25 years
15-20 years
10-15 years
5-10 years
Less than 5 years
5%
3%
18%
41%
19%
14%
WAULT* 11.6 years if all tenants
exercise their break options
Newport (10%)
Aberdeen (3%)
Risca Tesco (<1%)
Thirsk (<1%)
* Weighted Average Unexpired Lease Term
South East -
30%
(8 properties)
North -
24%
(8 properties)
East Anglia -
16%
(5 properties)
Midlands -
11%
(3 properties)
South West -
7%
(3 properties)
Scotland -
7%
(5 properties)
London -
4%
(2 properties)
Wales -
1%
(1 property)
Capital value % by region
30%
11%
4%
7%
24%
16%
7%
1%
28
Value and Indexed Property Income Trust PLC
• Annual Report and Financial Statements 2024
MANAGER’S REPORT
CONTINUED
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
on pages 100 to 102 of this Annual
Report, 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
29
Value and Indexed Property Income Trust PLC
• Annual Report and Financial Statements 2024
Property portfolio at 31 March 2024
1. Supermarkets
9
properties
30
%
of contracted
rent
7.7
years
WAULT
100
%
indexed
Garstang
2. Industrial / Warehouse
13
properties
29
%
of contracted
rent
9.3
years
WAULT
85
%
indexed
Westbury
30
Value and Indexed Property Income Trust PLC
• Annual Report and Financial Statements 2024
MANAGER’S REPORT
CONTINUED
3. Leisure - Bowling and Health Club
6
properties
21
%
of contracted
rent
17.4
years
WAULT
100
%
indexed
4. Leisure - Hotels
2
properties
8
%
of contracted
rent
15.0
years
WAULT
100
%
indexed
Brentwood
Alnwick
31
Value and Indexed Property Income Trust PLC
• Annual Report and Financial Statements 2024
6. Other (Caravan park and library)
2
properties
8
%
of contracted
rent
9.2
years
WAULT
100
%
indexed
Dover
5. Leisure - Pubs
3
properties
4
%
of contracted
rent
22.7
years
WAULT
100
%
indexed
London
32
Value and Indexed Property Income Trust PLC
• Annual Report and Financial Statements 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 on page 34 of 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.
Aylesford
33
Value and Indexed Property Income Trust PLC
• Annual Report and Financial Statements 2024
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
Restated
31
Mar
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
Financial record
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 on page 130.
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%).
* This is an Alternative Performance Measure (APM) which has been explained in the Glossary on page 131.
34
Value and Indexed Property Income Trust PLC
• Annual Report and Financial Statements 2024
BUSINESS REVIEW
CONTINUED
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.
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.
Aberfoyle
35
Value and Indexed Property Income Trust PLC
• Annual Report and Financial Statements 2024
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 on pages 104 and 105 of
this Annual Report.
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 on
pages 8 and 9 and in the Manager’s
Report on pages 10 to 31.
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.
36
Value and Indexed Property Income Trust PLC
• Annual Report and Financial Statements 2024
BUSINESS REVIEW
CONTINUED
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 on pages 109 to 111.
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
on pages 25 and 27. The long-term
performance record through the
varying property cycles since 1987 is
set out on pages 124 and 125. 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 on pages
108 to 114.
37
Value and Indexed Property Income Trust PLC
• Annual Report and Financial Statements 2024
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 this Strategic Report on pages
8, 26 and 41 and in the Governance
Report on pages 47 and 64 in this
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).
38
Value and Indexed Property Income Trust PLC
• Annual Report and Financial Statements 2024
BUSINESS REVIEW
CONTINUED
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
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 on page 33 of this Business
Review. Definitions of the APMs can
be found in the Glossary on page 131.
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 on pages 95 and 96.
In addition, the Directors will
consider economic, regulatory, and
political trends and factors that may
impact on the Company’s future
development and performance.
39
Value and Indexed Property Income Trust PLC
• Annual Report and Financial Statements 2024
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 on page 105.
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 this Annual
Report, and from the information
provided in the Chairman’s
Statement (pages 8 and 9) and in the
Manager’s Report (pages 10 to 31).
Newport
40
Value and Indexed Property Income Trust PLC
• Annual Report and Financial Statements 2024
BUSINESS REVIEW
CONTINUED
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:
Form of Engagement
Influence on Board decision making
Stakeholder: Shareholders
AGM – Shareholders are encouraged
to attend the AGM and are provided
with the opportunity to ask questions
and engage with the Directors and the
Manager. Shareholders are also encouraged
to exercise their right to vote on the
resolutions proposed at the AGM (please
refer to the further information on the AGM
in the Directors’ Report on pages 52 and 53).
Shareholder documents – The Company
reports formally to Shareholders by
publishing Annual and Interim Reports,
normally in June and November each year.
Significant matters or reporting
obligations are disseminated to
Shareholders by way of announcement
to the London Stock Exchange.
The Company Secretary acts as a key
point of contact for the Board, and
all communications received from
Shareholders are circulated to the Board.
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.
Dividend declarations – The Board recognises
the importance of dividends to Shareholders
and takes this into consideration when making
decisions to pay quarterly and propose final
dividends for each year. Further details regarding
dividends for the year under review can be found
in the Chairman’s Statement on pages 8 and 9.
Share buy-back policy – the Directors
recognise the importance to Shareholders of
the Company maintaining a share buy-back
policy and considered this when establishing
the current programme. Further details can
be found in this Business Review on page 39
and in the Directors’ Report on page 53.
Shareholder communication and feedback
from the Broker directly influences the
Board’s review of strategy, the asset allocation
considerations, and the Manager’s guidance
on desirable investment characteristics.
The Directors recognise the importance to
Shareholders of having a diverse Board with a range
of skilled and experienced individuals represented.
Stakeholder: Manager
Quarterly Board Meetings – The Manager
attends every Board Meeting and
presents a detailed portfolio analysis
and reports on key issues, including the
performance of the property portfolio.
The Directors challenge the Manager where
they feel it is appropriate.
The Directors and the Manager are cognisant of
the Company’s investment policy and the strategy
agreed by the Board, which the Manager has been
tasked with implementing.
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.
41
Value and Indexed Property Income Trust PLC
• Annual Report and Financial Statements 2024
Form of Engagement
Influence on Board decision making
Stakeholder: Corporate Broker
The Corporate Broker attends Board
Meetings regularly to present an update on
the market, the Company’s performance,
and a comparison with the performance of
the Company’s peers.
The Directors review the performance of all third
party service providers and, during the year, made
the decision to appoint Joh. Berenberg, Gossler &
Co. KG as its new Corporate Broker.
Stakeholder: Depositary and Custodian
Regular statements and control
reports received, with all holdings
and balances reconciled.
The Directors review the performance of all third
party service providers, including oversight of
securing the Company’s assets.
Stakeholder: Advisers & Registrar
The Company relies on the expert audit,
accounting and legal advice received
from its Auditor, Administrator and Legal
Advisers. The Directors ensure that the
Registrar is a market leader in the services
it provides to the Company’s Shareholders.
The Directors review the performance of all third
party service providers and, during the year, on the
recommendation of the Audit and Management
Engagement Committee, appointed RSM UK
Audit LLP as new Auditors to the Company.
There were no other key decisions made in the year to 31 March 2024 that require to be disclosed.
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 on pages 71 to 79.
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 on page 46.
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
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.
York
Governance
Report
43
44
Value and Indexed Property Income Trust PLC
• Annual Report and Financial Statements 2024
DIRECTORS’ DETAILS
John Kay
Chairman
Sir John Kay is an economist
specialising in the application
of economics to business issues.
He has been chairman of London
Economics, has held chairs at
the London Business School
and Oxford University and was
previously a director of Scottish
Mortgage Investment Trust. John
was knighted in the Queen’s 2021
Birthday Honours List for services
to economics, finance and business.
He was appointed as a Director on 4
February 1994 and as Chairman on
8 July 2022 and is a member of the
Audit and Management Engagement
and Nomination Committees.
Matthew Oakeshott
Matthew Oakeshott, after studying
economics at Oxford University and
a period as special adviser to Mr Roy
Jenkins as Home Secretary, joined
S.G.Warburg & Co in 1976 and became
a director of Warburg Investment
Management in 1978. He was
Investment Manager of Courtaulds
Pension Fund from 1981 to 1985. He is
chairman of OLIM Property Limited,
which manages the Company’s
property portfolio. Matthew is
one of the original founders of the
Company having served previously
on the Board from 1 April 2007 to 1
April 2019. He was re-appointed as a
Director on 10 September 2020.
David Smith
David Smith retired from the legal
firm Shepherd and Wedderburn LLP
in 2008 where he was a partner for
34 years, specialising in commercial
property. He was appointed as
a Director on 10 July 2009 and
chairs the Audit and Management
Engagement Committee and the
Nomination Committee.
Jo Valentine
Baroness Josephine Valentine
was appointed as a Director on 13
November 2020. She is a crossbench
member of the House of Lords and
her other current non-executive roles
include, chair of Heathrow Southern
Railway Ltd and an executive at
Business in the Community.
Other previous roles have included
chief executive of London First; an
investment banker at Barings Bank;
head of the corporate finance and
planning function at The BOC Group;
a National Lottery commissioner; a
member of the Board of Governors
for The Peabody Trust, a London
housing association; a non-executive
director of HS2 and of Crossrail;
and a board member of a Triple
Point venture capital trust. Jo is
the Company’s Senior Independent
Director and a member of the Audit
and Management Engagement and
Nomination Committees.
Lucy Winterburn
Lucy Winterburn was appointed as
a Director on 1 August 2022. She is
also a Director in Savills Investment
Management’s UK Investment
Team and is the Fund Manager
for a FTSE 100 Corporate Pension
Fund, invested throughout the UK
across all commercial property
sectors. After graduating from
Aberdeen University, Lucy joined
Savills in 1996 on their graduate
training scheme, qualifying as a
Chartered Surveyor in 1998. Lucy is
a member of the Company’s Audit
and Management Engagement and
Nomination Committees.
All Directors, other than Matthew Oakeshott, are members of the Audit and Management
Engagement Committee and the Nomination Committee.
All Directors, other than Matthew Oakeshott, are also directors of Value and Indexed
Property Income Services Limited.
45
Value and Indexed Property Income Trust PLC
• Annual Report and Financial Statements 2024
DIRECTORS’ REPORT
The Directors submit their report
together with the Financial
Statements of the Group and the
Company for the year ended 31
March 2024. A summary of the
financial results for the year can be
found in the Highlights of the year
and Financial record in the Business
Review on page 33. Details of the final
dividend for the year are set out in
the Chairman’s Statement and in the
Business Review within the Strategic
Report. The Statement of Corporate
Governance, which forms part of this
Directors’ Report, is shown on pages
58 to 65.
Principal activity
and status
The Company has applied for and
has been accepted as an approved
investment trust under Sections
1158 and 1159 of the Corporation
Tax Act 2010 and Part 2, Chapter 1
of Statutory Instrument 2011/2999.
This approval relates to accounting
periods commencing on or after
1 April 2012. The Directors are
of the opinion that the Company
has conducted its affairs so as to
be able to retain such approval.
The Company intends to manage
its affairs so that its Ordinary
Shares continue to be a qualifying
investment for inclusion in the
stocks and shares component of an
Individual Savings Account.
The Company is a member of the AIC,
and its Ordinary Shares are listed on
the London Stock Exchange.
Regulatory status
As an investment trust company
pursuant to Section 1158 of the
Corporation Tax Act 2010, the
rules of the FCA in relation to non-
mainstream investment products do
not apply to the Company.
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
Chairman’s Statement on pages 8
and 9, the Manager’s Review on pages
10 to 31, and in the Business Review
on pages 32 to 41, 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
on page 91) when preparing the
Annual Report and Accounts.
46
Value and Indexed Property Income Trust PLC
• Annual Report and Financial Statements 2024
DIRECTORS’ REPORT
CONTINUED
Viability statement
For the purposes of this Viability
Statement, references to “the
Company” shall include the Group
and the Parent Company. In
accordance with Provision 31 of the
UK Corporate Governance Code,
published in July 2018 and Principle
36 of the AIC Code of Corporate
Governance, published in February
2019 (the Codes), the Board has
considered the Company’s prospects
and risks for the forthcoming five-
year period to 31 March 2029. The
Board considers that this five-
year period is appropriate for an
investment trust company of its size
and based on the financial position
of the Company as detailed in the
Chairman’s Statement, the Manager’s
Report and the Business Review of
this Annual Report.
In making this statement, the Board
carried out a robust assessment of
the principal and emerging risks
facing the Company as set out in the
Business Review, including those
that might threaten its business
model, future performance, solvency,
or degree of liquidity within the
portfolio. The Board concentrated
its efforts on the major factors that
affect the economic, regulatory and
political environment, including
the impact of the cost of living
crisis, high interest rates and high
inflation, all being experienced
in the UK at present, and the
current geopolitical unrest.
The Board has considered the
Company’s financial position and
its ability to liquidate its portfolio
and meet its liabilities and draws
attention to the following points,
which the Board took into account
in its assessment of the Company’s
future viability:
a.
The property portfolio was
valued at £138.1m as at 31 March
2024 as detailed in Note 9 to the
Financial Statements on pages
100 to 102 of this Annual Report.
The loan facilities expiring in
2026 and 2033 require security of
£88.625m.
b.
The Company is closed ended in
nature and, therefore, does not
require to sell investments when
Shareholders wish to sell their
shares. Proposals will be put to
the 2026 AGM of the Company to
offer Shareholders an exit at net
asset value less costs.
c.
The Board has considered the
risks faced by the Company as
detailed in the Business Review
and referred to in Note 21 to the
Financial Statements on pages
108 to 114 and have concluded
that the Company would be able
to take appropriate action to
protect the value of the Company.
d.
Due to the nature of the business
of the Company and the nature
of its investments and to the
Company’s long history, the
Board are able to conclude that
expenses are predictable and
modest in relation to asset values.
There is a significant proportion
of expenses on an ad valorem
basis (management fees to 31
March 2024 are 22.1% of total
expenses) which reduces as NAV
declines. Expenses including
interest were covered 2.33 times
by income in the year.
e.
There are no capital
commitments currently foreseen
that would alter the Board’s view.
f.
Details of the financial covenants
which the Company complies
with are detailed in Note 12 to the
Financial Statements on pages
104 and 105.
In assessing the Company’s future
viability, the Board have assumed
that investors will wish to continue
to have exposure to the Company’s
activities, in the form of a closed
ended entity; performance will
continue to be satisfactory; and
the Company will continue to have
access to sufficient capital.
Accordingly, given the above, the
Board has concluded that there is
a reasonable expectation that the
Company will be able to continue
in operation and meet its liabilities
as they fall due over the five years
ending 31 March 2029.
47
Value and Indexed Property Income Trust PLC
• Annual Report and Financial Statements 2024
Financial instruments
The Company’s financial instruments
comprise of its investment portfolio,
cash balances, and payables and
receivables that arise directly from
its operations, including accrued
income and purchases and sales
awaiting settlement. The main risks
that the Company faces arising
from its financial instruments are
disclosed in Note 21 to the Financial
Statements on pages 108 to 114.
Global greenhouse
gas emissions
The Company is a low energy
user and is, therefore, exempt
from the reporting obligations
under the Companies (Director’s
Report) and Limited Liability
Partnerships (Energy and Carbon
Report) Regulations 2018, which
implement the Government’s policy
on Streamlined Energy and Carbon
Reporting (SECR). The Company
has no greenhouse gas emissions
to report from the operations of
the Company, nor does it have
any direct responsibility for any
emissions producing sources,
including those within its underlying
investment portfolio under Part
7 of Schedule 7 to the Large and
Medium-sized Companies and
Groups (Accounts and Reports)
Regulations 2008, as amended.
Share capital
and voting rights
As at 31 March 2024, the Company’s
share capital comprised 42,664,550
Ordinary Shares of 10p nominal
value in issue and 2,885,425 Ordinary
Shares of 10p nominal value held in
Treasury (31 March 2023: 43,012,464
Ordinary Shares of 10p nominal value
in issue and 2,537,511 Ordinary Shares
of 10p nominal value in Treasury). As
at the date of this Annual Report, the
Company’s share capital comprised
42,476,147 Ordinary Shares in issue
and 3,073,828 Ordinary Shares 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.
Directors
Biographies of the Directors who held
office at the year end and as at the
date of this Annual Report are shown
in the Directors’ Details section on
page 44 of this Annual Report.
The Directors’ interests in the shares
of the Company at the year end are
shown in the table on page 57. The
Directors’ interests were unchanged
as at the date of this Annual Report.
The Company’s Articles of
Association (the Articles) require
that each Director shall retire and
seek re-election at every third
Annual General Meeting (AGM). A
Director appointed during the year
is required, under the provisions of
the Company’s Articles, to retire and
seek election by Shareholders at the
next AGM.
The Directors take the view, in line
with the AIC Code of Corporate
Governance (AIC Code), that
independence is not compromised
by length of service on the Board and
that experience can add significantly
to the Board’s strength.
Accordingly, all Directors who
served during the year, other
than Matthew Oakeshott, are
considered by the Board to be
independent. Matthew Oakeshott is
not considered to be independent
as he is chairman of OLIM Property,
the Investment Manager, and
a substantial Shareholder.
Notwithstanding the provisions in
the Articles, in accordance with the
AIC Code, the Board has agreed that
all Directors should be subject to
annual re-election.
48
Value and Indexed Property Income Trust PLC
• Annual Report and Financial Statements 2024
DIRECTORS’ REPORT
CONTINUED
No external search consultancy was
used by the Company during the year
ended 31 March 2024.
During the year under review, the
Nomination Committee reviewed the
skills, experience and independence
of John Kay, Matthew Oakeshott,
David Smith, Jo Valentine and Lucy
Winterburn, being the Directors
standing for re-election. The process
was led by the Senior Independent
Director and involved discussions
with each Director on their
performance, the performance of
the Committees of the Board, and of
the Board as a whole. No individual
Director was responsible for their
own appraisal. The appraisal of
the Senior Independent Director
was undertaken by the Chairman
and the appraisal of the Chairman
was undertaken by the Nomination
Committee in his absence. Following
the review, the Committee has no
hesitation in recommending to the
Board and to Shareholders their re-
election as Directors at the AGM.
The Board confirms that, following
a formal process of evaluation,
the performance of each
Director standing for re-election
continues to be effective and all
Directors have demonstrated
commitment to their roles.
John Kay is an economist with
over 35 years investment trust
experience. He was knighted in the
Queen’s 2021 Birthday Honours
List for services to economics,
finance and business. John is the
Chairman of the Company.
Matthew Oakeshott is one of
the original founders of the
Company and had served on the
Board previously for a number
of years. He has extensive
investment trust experience and
is the chairman of OLIM Property
Limited, (OLIM Property) the
Company’s Investment Manager.
David Smith was a partner in the
legal firm Shepherd & Wedderburn
LLP for 34 years, specialising in
commercial property. David is the
Chair of the Audit and Management
Engagement Committee and
Nomination Committee.
Jo Valentine has extensive corporate
finance experience and has
previously worked as an investment
banker with many years’ experience
in holding senior positions on other
boards. Jo is the Company’s Senior
Independent Director.
Lucy Winterburn is a Chartered
Surveyor and Director in Savills
Investment Management UK
Investment Team and a Fund
Manager for a FTSE 100 Corporate
Pension Fund invested throughout
the UK across all commercial
property sectors.
Further information on the
qualifications, skills, and
experience of the Directors subject
to re-election can be found in
the Directors’ Details section on
page 44 of this Annual Report.
The Board believes that, for the above
reasons, the contribution of each
Director continues to be important to
the continued long-term success of
the Company, as the combined skills
and experience ensure a balanced
Board of Directors with a wealth
of knowledge and understanding
in the key areas that are relevant
to the Company. It is, therefore,
believed to be in the best interests
of Shareholders that those Directors
standing for re-election be re-elected
and Resolutions to this effect will
be proposed at the 2024 AGM.
49
Value and Indexed Property Income Trust PLC
• Annual Report and Financial Statements 2024
Investment management
The Company complies with the
AIFMD which came into force
on 22 July 2014. An investment
management agreement was entered
into by the Company (effective from
22 July 2014) in which the Company
appointed VIS, a wholly owned
subsidiary of the Company, as its
AIFM. Under a separate updated and
restated investment management
agreement, entered into by the
Company and VIS on 15 May 2015
(and further revised on 20 September
2018 and 5 November 2020), VIS
has contractually delegated its
management responsibilities for the
property portfolio to OLIM Property.
The investment management
agreement provides that, with effect
from 1 October 2020, VIP shall pay
to OLIM Property a management fee
of 0.6% per annum of the total value
of VIP’s assets (such assets being
valued at quarterly valuation dates
on 31 March, 30 June, 30 September,
and 31 December in each year). There
is no performance fee.
Accordingly, during the year ended 31
March 2024, OLIM Property received
an annual investment management
fee of £863,000 (2023 - £990,000)
excluding VAT.
The Directors, together with the
Audit and Management Engagement
Committee and the Directors of
VIS, review the performance of the
Investment Manager and review
the terms and conditions of its
appointment on a regular basis.
Following this review, the Directors
are satisfied that the continuing
appointment of OLIM Property as
Investment Manager is in the best
interests of Shareholders as a whole,
as the Company benefits from the
specialised team of investment
professionals within OLIM Property.
The costs and expenses of VIS are
also met by the Company.
An additional fee is payable to
the Company Secretary, Maven
Capital Partners UK LLP, in respect
of company secretarial and
administrative services.
50
Value and Indexed Property Income Trust PLC
• Annual Report and Financial Statements 2024
DIRECTORS’ REPORT
CONTINUED
As at 10 June 2024, being the last practicable date prior to the publication of
this Annual Report, the only persons known to the Company who, directly or
indirectly, were interested in 3% or more of the Company’s issued ordinary
share capital were as follows:
* Included in the Rathbones Nominees Limited and in the Rathbone Nominees Limited (Charity)
holding is 10,915,000 Ordinary Shares (25.7%) indirectly held by Matthew Oakeshott, as detailed
on page 57.
Substantial interests
As at 31 March 2024, the only persons known to the Company who, directly or
indirectly, were interested in 3% or more of the issued ordinary share capital
of the Company were as follows:
Shareholder
Number of
Ordinary Shares
% held
RATHBONE NOMINEES LIMITED*
8,497,916
19.9%
RATHBONE NOMINEES LIMITED
<CHARITY>*
4,500,000
10.6%
INTERACTIVE INVESTOR SERVICES
NOMINEES LIMITED <SMKTISAS>
3,357,778
7.9%
INTERACTIVE INVESTOR SERVICES
NOMINEES LIMITED <SMKTNOMS>
1,798,927
4.2%
HARGREAVES LANSDOWN (NOMINEES)
LIMITED <15942>
1,791,996
4.2%
HARGREAVES LANSDOWN (NOMINEES)
LIMITED <HLNOM>
1,519,670
3.6%
INTERACTIVE INVESTOR SERVICES
NOMINEES LIMITED <TDWHSIPP>
1,416,039
3.3%
* Included in the Rathbones Nominees Limited and the Rathbones Nominees Limited (Charity)
holding is 10,915,000 Ordinary Shares (25.6%) indirectly held by Matthew Oakeshott, as detailed
on page 57.
Shareholder
Number of
Ordinary Shares
% held
RATHBONE NOMINEES LIMITED*
8,404,800
19.8%
RATHBONE NOMINEES LIMITED
<CHARITY>*
4,500,000
10.6%
INTERACTIVE INVESTOR SERVICES
NOMINEES LIMITED <SMKTISAS>
3,462,268
8.2%
HARGREAVES LANSDOWN (NOMINEES)
LIMITED <15942>
1,826,144
4.3%
INTERACTIVE INVESTOR SERVICES
NOMINEES LIMITED <SMKTNOMS>
1,745,053
4.1%
HARGREAVES LANSDOWN (NOMINEES)
LIMITED <HLNOM>
1,473,055
3.5%
INTERACTIVE INVESTOR SERVICES
NOMINEES LIMITED <TDWHSIPP>
1,409,920
3.3%
51
Value and Indexed Property Income Trust PLC
• Annual Report and Financial Statements 2024
Independent auditor
RSM UK Audit LLP (RSM) were
appointed as the Company’s
Independent Auditor on
14 November 2023.
The Directors are of the view
that the Company’s Independent
Auditor should continue in office,
and Resolutions 9 and 10 will be
proposed at the 2024 AGM to propose
the appointment of RSM and to
authorise the Directors to fix its
remuneration. The Directors have
received assurances from RSM that
it is independent and objective and
the Directors remain satisfied that
objectivity and independence is
being safeguarded by RSM. No non-
audit services were provided by RSM
to the Company and, accordingly,
no non-audit fees were paid to RSM
during the year to 31 March 2024.
The Directors confirm that, as far
as they are each aware, as at the
date of this Annual Report, there
is no relevant audit information of
which the Company’s Independent
Auditor is unaware, and that
each Director has taken all the
steps that they might reasonably
be expected to have taken as a
Director, to make themselves
aware of any relevant audit
information and to establish that
the Company’s Independent Auditor
was aware of that information.
Additional information
Information relating to dividends,
likely future developments and
important events since the year
end, are detailed in the Chairman’s
Statement on pages 8 and 9 and in
the Business Review on pages 32 to
41. Where not provided elsewhere in
the Directors’ Report, the following
additional information is required
to be disclosed by the Large and
Medium-sized Companies and
Groups (Accounts and Reports)
Regulations 2008.
There are no restrictions on the
transfer of Ordinary Shares in the
Company, or their related voting
rights, other than certain restrictions
which may from time to time be
imposed by law (for example, the
Market Abuse Regulation). The
Company is not aware of any
agreements between Shareholders
that may result in a transfer of
securities and/or voting rights.
The Company’s Articles may only
be amended by the passing of a
Special Resolution at a general
meeting of Shareholders.
52
Value and Indexed Property Income Trust PLC
• Annual Report and Financial Statements 2024
DIRECTORS’ REPORT
CONTINUED
Annual General Meeting
The Notice of the Annual General
Meeting, which will be held on
Thursday, 11 July 2024 at 12.30pm
at the offices of Shepherd And
Wedderburn LLP, 9 Haymarket
Square, Edinburgh EH3 8FY and
related notes can be found on pages
132 to 136 of this Annual Report.
The Board encourages Shareholders
to vote at the AGM and votes can be
submitted by hard copy proxy form,
via CREST, or electronically using
the Registrar’s share portal service at
www.investorcentre/eproxy. Please
refer to the notes to the Notice of
Annual General Meeting on pages 134
to 136 of this Annual Report.
The Notice of Annual General
Meeting is normally sent out
at least 20 working days in
advance of the meeting.
Among the Resolutions being
put to the AGM, the following is
a more detailed explanation of
Resolutions 11 to 14. Resolutions
1 to 10 are self-explanatory and
require no further explanation.
Issue of Ordinary
Shares by the Company
Resolution 11, which is an Ordinary
Resolution, will, if passed, renew
the Directors’ authority to allot
new Ordinary Shares up to a
nominal value of £424,761. This will
allow the Directors to allot up to
4,247,610 Ordinary Shares (being
approximately 10% of the total
ordinary issued share capital of the
Company as at the date of the Notice
of Annual General Meeting set out
on pages 132 to 136 of this Annual
Report) (excluding Treasury shares).
During the year ended 31 March 2024,
no Ordinary Shares were allotted
(2023: nil).
Limited disapplication
of pre-emption rights
Resolution 12, which is a Special
Resolution, will, if passed, renew
the Directors’ existing authority to
allot new shares or sell Treasury
shares for cash without the shares
first being offered to existing
Shareholders in proportion to their
existing holdings. This will give the
Directors authority to make limited
allotments or sell shares from
Treasury of up to a nominal value
of £424,761, being up to 4,247,610
Ordinary Shares, representing
approximately 10% of the total
ordinary issued share capital of the
Company as at the date of the Notice
of Annual General Meeting set out
on pages 132 to 136 of this Annual
Report (excluding Treasury shares).
The authority to issue shares on
a non pre-emptive basis includes
shares held in Treasury (if any) which
the Company sells or transfers,
including pursuant to the authority
conferred by Resolution 11. Since
the introduction of The Companies
(Acquisition of Own Shares)
(Treasury Shares) Regulations
2003 on 1 December 2003, a listed
company is able to hold shares that it
has repurchased in Treasury rather
than cancel them.
New Ordinary Shares will only be
issued at prices representing a
premium to the last published net
asset value per share.
53
Value and Indexed Property Income Trust PLC
• Annual Report and Financial Statements 2024
Purchase of the Company’s
Ordinary Shares
During the year ended 31 March 2024,
347,914 Ordinary Shares were bought
back by the Company to be held in
Treasury, (2023: 545,000 shares
bought back and held in Treasury).
As at the date of the approval of this
Annual Report, there were 3,073,828
Ordinary Shares held in Treasury.
The Company’s buy back authority
was last renewed at the AGM held on
2 August 2023. Special Resolution 13
renews the Board’s authority to make
market purchases of the Company’s
Ordinary Shares in accordance
with the provisions contained in
the Companies Act 2006 and the
FCA Listing Rules. Accordingly, the
Company will seek the authority to
purchase up to a maximum of 14.99%
of the issued ordinary share capital
(excluding Treasury shares) (being
approximately 6,367,174 Ordinary
Shares as at the date of the Notice
of Annual General Meeting set out
on pages 132 to 136 of this Annual
Report) at a minimum price of not
less than 10 pence per share (being
the nominal value). Under the Listing
Rules of the FCA, the maximum price
that may be paid on the exercise of
this authority must not exceed the
higher of: (i) 105% of the average of
the middle market quotations (as
derived from the Daily Official List
of the London Stock Exchange) for
the shares over the five business
days immediately preceding the
date of purchase; and (ii) the higher
of the last independent trade and
the highest current independent bid
on the trading venue on which the
purchase is carried out.
The authorities being sought under
Resolutions 11, 12 and 13 shall expire
at the conclusion of the AGM in
2025 or, if earlier, on the expiry of 15
months from the date of the passing
of Resolutions 11, 12 and 13 unless
such authority is renewed prior to
such time. The Directors will only
exercise these authorities if they
believe it is advantageous and in the
best interests of Shareholders and
would result in an increase in the net
asset value per share. Any Ordinary
Shares purchased shall either be
cancelled or held in Treasury.
Notice of Meeting
Under the Companies Act 2006,
the notice period for the holding of
general meetings of the Company is
21 clear days unless Shareholders
agreed to a shorter notice period and
certain other conditions are met.
Resolution 14, which is a Special
Resolution, will be proposed to
authorise the Directors to call general
meetings of the Company (other
than AGMs) on not less than 14 clear
days’ notice, as permitted by the
Companies Act 2006 amended by the
Companies (Shareholders’ Rights)
Regulations 2009.
It is currently intended that this
flexibility to call general meetings
on shorter notice will only be used
for non-routine business and where
considered to be in the interests of
all Shareholders. If Resolution 14
is passed, the authority to convene
general meetings on not less than
14 clear days’ notice will remain
effective until the conclusion of the
AGM in 2025 or, if earlier, on the
expiry of 15 months from the date
of passing of Resolution 14, unless
renewed prior to such time.
Recommendation
Your Board considers Resolutions 1
to 11 inclusive, which are all Ordinary
Resolutions, and Resolutions 12 to
14 inclusive, which are all Special
Resolutions, to be in the best
interests of the Company and most
likely to promote the success of
the Company for the benefit of its
members as a whole. Accordingly,
your Board unanimously
recommends that Shareholders
vote in favour of Resolutions 1 to 14
inclusive to be proposed at the AGM
to be held on Thursday, 11 July 2024.
By order of the Board
Maven Capital Partners UK LLP
Company Secretary
11 June 2024
54
Value and Indexed Property Income Trust PLC
• Annual Report and Financial Statements 2024
DIRECTORS’ REMUNERATION REPORT
This report has been prepared in accordance with the requirements of the
Companies Act 2006. An Ordinary Resolution for the approval of this report
will be put to the members of the Company at the forthcoming AGM. The
law requires the Company’s Auditor to audit certain of the disclosures made.
Where disclosures have been audited, they are indicated as such, and the
Auditor’s Opinion is included in their report on pages 71 to 79.
The Nomination Committee of the Board, chaired by David Smith, fulfils
the functions of a remuneration committee in relation to setting the level of
Directors’ fees and the Remuneration Policy. As none of the Directors is an
executive director, the Company is not required to comply with the Principles
of the UK Corporate Governance Code in respect of executive directors’
remuneration.
As at 31 March 2024, and as at the date of this Annual Report, the Company
had five Directors and their biographies are shown in the Directors’ Details
section on page 44 of this Annual Report. The names of the Directors who
served during the year together with the fees paid during the year are shown
in the table on page 55.
Remuneration policy
The Company’s policy is that the remuneration of the Directors should
reflect the experience of the Board as a whole and be fair and comparable
with that of other investment trust companies that are similar in size, have
a similar capital structure and a similar investment objective. Directors
are remunerated in the form of fees, payable monthly in arrears, to the
Director personally or to a third party specified by him or her. The fees for
the Directors are determined within the limits set out in the Company’s
Articles of Association, which limit the aggregate of the fees payable to the
Directors to £200,000 and the approval of Shareholders in general meeting
would be required to change this limit. It is intended that the fees payable
to the Directors should reflect their duties, responsibilities, and the value
and amount of time committed to the Company’s affairs, and should also be
sufficient to enable candidates of a high quality to be recruited and retained.
The Directors do not receive bonuses, pension benefits, share options, long-
term incentive schemes or other benefits, and the fees are not specifically
related to the Directors’ performance, either individually or collectively.
A copy of the Remuneration Policy may be inspected by the members of the
Company at its registered office.
It is the Board’s intention that the above Remuneration Policy be put to a
Shareholders’ vote at least once every three years and, as a resolution was last
approved at the AGM held in 2023, an Ordinary Resolution for its approval for
the three years to 31 March 2029 will next be proposed at the AGM to be held
in 2026.
At the AGM held on 2 August 2023, the result in respect of the Ordinary
Resolution to approve the Directors’ Remuneration Policy for the three years
to 31 March 2026 was as follows:
Percentage of
votes cast for
Percentage of
votes cast against
Number of
votes withheld
Remuneration Policy
99.19
0.81
43,352
During the year ended 31 March 2024, the Board was not provided with advice
or services by any person in respect of its consideration of the Directors’
remuneration. However, in the application of the Board’s policy on Directors’
remuneration, as defined above, the Committee expects, from time to time, to
review the fees paid to the directors of other investment trust companies.
55
Value and Indexed Property Income Trust PLC
• Annual Report and Financial Statements 2024
During the year ended 31 March 2023, the Nomination Committee carried out a review of the
remuneration policy and the level of Directors’ fees and recommended to the Board that rates
should be increased by approximately 10% for each Director with effect from 1 April 2023 and fixed
at the revised rate for the year to 31 March 2025. Accordingly, the rates for the year to 31 March
2025 will remain at the rates agreed for the year to 31 March 2024 and comprise £33,000 for the
Chairman, £27,000 for the Chairman of the Audit and Management Engagement Committee and
£24,500 for each other Director.
An Ordinary Resolution to approve this Directors’ Remuneration Report will be put to
Shareholders at the 2024 AGM. At the AGM held on 2 August 2023, the result in respect of the
Ordinary Resolution to approve the Directors’ Remuneration Report for the year ended 31 March
2023 was as follows:
Percentage of
votes cast for
Percentage of
votes cast against
Number of
votes withheld
Remuneration Report
99.23
0.77
43,352
Directors’ fees and total remuneration (audited)
The Company does not have any employees and Directors’ remuneration comprises solely of
Directors’ fees. The Directors’ fees for the years ended 31 March 2021, 2022, 2023, 2024 and
projected fees for the year ending 31 March 2025, respectively are as follows:
Directors'
fees
(fixed)
Year
ended 31
March
2021 £
%
change
for the
year
to 31
March
2022
Directors'
fees
(fixed)
Year
ended 31
March
2022 £
%
change
for the
year
to 31
March
2023
Directors'
fees
(fixed)
Year
ended 31
March
2023 £
%
change
for the
year
to 31
March
2024
Directors'
fees
(fixed)
Year
ended 31
March
2024 £
%
change
for the
year
to 31
March
2025
Directors'
fees
(fixed)
Year
ending
31 March
2025 £
James
Ferguson
1
30,000
–
30,000
–
8,145
–
–
–
–
John Kay
2
22,000
–
22,000
–
27,828
10.0
33,000
-
33,000
Dominic
Neary
3
22,000
–
6,860
–
–
–
–
–
–
Matthew
Oakeshott
4
–
–
–
–
–
-
–
–
–
David Smith
(Chair of the
Audit and
Management
Engagement
Committee)
24,500
–
24,500
–
24,500
10.2
27,000
–
27,000
Jo Valentine
5
8,433
–
22,000
–
22,000
11.4
24,500
–
24,500
Lucy
Winterburn
6
–
–
–
–
14,667
11.4
24,500
–
24,500
Total
106,933
–
105,360
–
97,140
–
109,000
–
109,000
1 James Ferguson retired as Chairman and from the Board following the conclusion of the 2022 AGM.
2 John Kay was appointed as Chairman following the conclusion of the 2022 AGM.
3 Dominic Neary retired from the Board following the conclusion of the 2021 AGM.
4 Matthew Oakeshott was appointed as a Director on 10 September 2020. No fees are payable to Mr Oakeshott for his services
as a Director.
5 Jo Valentine was appointed as a Director on 13 November 2020.
6 Lucy Winterburn was appointed as a Director on 1 August 2022.
The percentage changes are calculated based on the annualised amount payable to each individual Director.
56
Value and Indexed Property Income Trust PLC
• Annual Report and Financial Statements 2024
DIRECTORS’ REMUNERATION REPORT
CONTINUED
The above amounts exclude any employers’ national insurance contributions,
if applicable. No other form of remuneration was received by the Directors
and no Director has received any taxable expenses, compensation for loss of
office or non-cash benefit for the year ended 31 March 2024 (2023: £nil).
Directors do not have service contracts, but new Directors are provided
with a letter of appointment. The terms of appointment provide that
Directors should retire and be subject to election at the first AGM after
their appointment. The Company’s Articles require all Directors to retire
by rotation at least every three years. As noted in the Directors’ Report, the
Board has decided that, in accordance with the AIC Code, all Directors should
stand for annual re-election. There is no notice period and no provision for
compensation upon early termination of appointment, save for any arrears of
fees which may be due.
During the year ended 31 March 2024, no communication had been received
from Shareholders regarding Directors’ remuneration.
Relative cost of Directors’ remuneration
The chart below shows, for the years ended 31 March 2023 and 31 March 2024,
the cost of Directors’ fees compared with the level of dividend distribution.
Relative Cost of Directors’ Remuneration
0
1,000
2,000
3,000
4,000
5,000
6,000
Directors’
fees 2023
£’000
Dividends
2023
Directors’
fees 2024
Dividends
2024
As noted in the Strategic Report, none of the Directors is executive and,
therefore, the Company does not have a chief executive officer, nor does it
have any employees. In the absence of a chief executive officer or employees,
there is no related information to disclose.
Directors’ and Officers’ liability insurance
The Company purchases and maintains liability insurance covering the
Directors and Officers of the Company. This insurance is not a benefit in kind,
nor does it form part of the Directors’ remuneration.
Company performance
The Board is responsible for the Company’s investment strategy and
performance, although the management of the Company’s investment
portfolio is delegated to the Investment Manager through the investment
management agreement, as referred to in the Directors’ Report.
57
Value and Indexed Property Income Trust PLC
• Annual Report and Financial Statements 2024
The graph below compares the total returns on an investment of £100 in the
Ordinary Shares of the Company, for each annual accounting period for the
ten years to 31 March 2024, assuming all dividends are reinvested, with the
total shareholder return on a notional investment of £100 made up of shares
of the same kinds and number as those by reference to which the FTSE All-
Share Index is calculated. This index was chosen for comparison purposes
as it was the most relevant to the Company’s investment portfolio for the ten
year period under review.
Cumulative total return for the ten year period ended 31 March 2024
(figures rebased to 100)
Directors’ interests (audited)
The Directors’ interests in the share capital of the Company as at 31 March
2024 (which were unchanged as at the date of this Annual Report), and as at
31 March 2023 are shown below. There is no requirement for Directors to hold
shares in the Company.
Approval
The Directors’ Remuneration Report was approved by the Board of Directors
and signed on its behalf by:
David Smith
Director
11 June 2024
100
120
140
160
180
200
VIP share price total return
FTSE all-share total return
Total return
31 March 2024 Ordinary
Shares of 10p each
31 March 2023 Ordinary
Shares of 10p each
John Kay
238,114
238,114
John Kay – Family
19,274
19,274
John Kay – as Trustee
74,830
74,830
Matthew Oakeshott & family
–
4,500,000
Matthew Oakeshott – the AIL
Pension Scheme
6,415,000
2,555,000
Matthew Oakeshott - The
Coltstaple Charitable Trust
4,500,000
4,500,000
David Smith
19,320
19,320
Jo Valentine
13,500
13,500
Lucy Winterburn
–
–
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
58
Value and Indexed Property Income Trust PLC
• Annual Report and Financial Statements 2024
STATEMENT OF CORPORATE GOVERNANCE
The Company is committed to, and
is accountable to the Company’s
Shareholders for, a high standard
of corporate governance. The Board
has put in place a framework for
corporate governance that it believes
is appropriate for an investment
trust company and enables it to
comply with The UK Corporate
Governance Code (the Code), which is
available from the website of the FRC
at www.frc.org.uk.
During the year under review,
the Company was a member of
the Association of Investment
Companies (AIC), which published a
revised version of its own AIC Code
of Corporate Governance (the AIC
Code) in February 2019. The Board
has adopted the principles of the
AIC Code and reports on compliance
with these below. The AIC Code
provides a comprehensive guide
to best practice in certain areas
of governance where the specific
characteristics of investment trusts
suggest alternative approaches
to those set out in the Code.
The key requirements of the AIC
Code include:
•
a requirement for the annual
re-election of all directors of all
investment companies;
•
a requirement that a board
should understand the views of
its company’s key stakeholders
and describe in the annual
report how their interests and
the matters set out in Section
172 of the Companies Act 2006
(the duty to promote the success
of the company) have been
considered in board discussions
and decision making;
•
that the chairman of an
investment company may now
remain in post beyond nine years
from the date of first appointment
by the board. Notwithstanding
this more flexible approach, the
board is required to determine
and disclose a policy on the
tenure of the chairman.
The AIC Code is available from the
AIC website at www.theaic.co.uk.
This Statement of Corporate
Governance forms part of the
Directors’ Report.
Application of the main
principles of the AIC code
This statement describes how
the main principles identified in
the AIC Code have been applied
by the Company throughout
the year, as is required by the
Listing Rules of the FCA.
The Board has considered the
Principles and Provisions of the
AIC Code, which address the
Principles and Provisions set out
in the Code, as well as setting out
additional Provisions on issues
that are of specific relevance to the
Company. The Board considers that
reporting against the Principles and
Provisions of the AIC Code, which
has been endorsed by the FRC,
provides more relevant information
to Shareholders. The endorsement
by the FRC means that by reporting
against the AIC Code, the Company
is meeting its obligations under the
Code and the associated disclosure
requirements of the Listing Rules,
and as such does not need to report
further on issues contained in the
Code which are irrelevant to them.
These include:
•
Provision 9 (dual role of chairman
and chief executive);
•
Provision 19 (tenure of the chair);
•
Provision 25 (internal audit
function); and
•
Provision 33 (executive
remuneration).
The Board is of the opinion that
the Company has complied
fully with the Principles and
Provisions of the AIC Code.
59
Value and Indexed Property Income Trust PLC
• Annual Report and Financial Statements 2024
The Board
As at the date of this Annual Report, the Board consists of two female
and three male Directors. Biographies of the current Directors
are shown on page 44 and indicate their high level and range of
investment, industrial, commercial and professional experience.
Other than Matthew Oakeshott, who is chairman of OLIM Property and a
substantial Shareholder, all other Directors who served during the year
are considered by the Board to be independent of the Investment Manager
and free of any material relationship with the Investment Manager. The
Board sets the Company’s values and objectives and ensures that its
obligations to Shareholders are met. It has formally adopted a schedule of
matters which are required to be brought to it for decision, thus ensuring
that it maintains full and effective control over appropriate strategic,
financial, operational and compliance issues. These matters include:
•
the maintenance of clear investment objectives and risk management
policies;
•
the monitoring of the business activities of the Company including
investment performance and revenue budgets;
•
Companies Act requirements such as the approval of the periodic
financial statements and approval and recommendation of any dividends;
•
major changes relating to the Company’s structure, including any share
buy backs and share issues;
•
succession planning including Board appointments and removals and the
related terms;
•
the appointment and removal of the AIFM, the Investment Manager and
the terms and conditions of the investment management agreement
relating thereto;
•
terms of reference and membership of Board Committees; and
•
London Stock Exchange/ Financial Conduct Authority matters, including
responsibility for approval of all circulars, listing particulars and approval
of all releases concerning matters decided by the Board.
The Board has a procedure in place to deal with a situation where a Director
has a conflict of interest, as required by the Companies Act 2006.
There is an agreed procedure for Directors to take independent professional
advice, if necessary, at the Company’s expense.
The Directors have access to the advice and services of the Company
Secretary, Maven Capital Partners UK LLP, through its appointed
representatives who are responsible to the Board:
•
for ensuring that Board procedures are complied with;
•
under the direction of the Chairman, for ensuring good information flows
within the Board and its Committees; and
•
for advising on corporate governance matters.
An induction meeting will be arranged on the appointment of any new
Director, covering details about the Company, the AIFM, the Investment
Manager, legal responsibilities, and investment trust industry matters.
60
Value and Indexed Property Income Trust PLC
• Annual Report and Financial Statements 2024
STATEMENT OF CORPORATE GOVERNANCE
CONTINUED
Directors are provided, on a regular basis, with key information on the
Company’s policies, regulatory and statutory requirements and internal
controls. Changes affecting Directors’ responsibilities are advised to the
Board as they arise.
John Kay is Chairman of the Company.
Jo Valentine is the Company’s Senior Independent Director.
David Smith is Chair of the Nomination Committee as the other Directors
consider that he has the skills and experience relevant to that role. There is
no Remuneration Committee as the Nomination Committee is responsible for
considering appointments to the Board and reviewing the level of Directors’
fees. David Smith also chairs the Audit and Management Engagement
Committee as the other Directors consider that he has the skills and
experience relevant to that role.
The Board meets at least four times each year.
The primary focus of quarterly Board Meetings is a review of investment
performance and related matters including asset allocation, peer group
information and industry issues. Between meetings, the Board maintains
contact with the Investment Manager and has access to senior members of
the management teams and to the company secretarial team.
During the year ended 31 March 2024, the Board held four quarterly Board
Meetings; and six meetings of a Committee of the Board to approve the
release of financial results and approve the release and substitution of
properties from the loan agreements. In addition, there were two meetings of
the Nomination Committee and three meetings of the Audit and Management
Engagement Committee.
Accordingly, Directors have attended Board and Committee Meetings during
the year ended 31 March 2024
1
as follows:
1 The number of meetings which the Directors were eligible to attend is in brackets.
To enable the Board to function effectively and allow Directors to discharge
their responsibilities, full and timely access is given to all relevant
information. In the case of Board Meetings, this consists of a comprehensive
set of papers, including the Investment Manager’s review, and discussion
documents regarding specific matters. The Directors make further enquiries
when necessary.
Board
Board
Committee
Audit and
Management
Engagement
Committee
Nomination
Committee
John Kay
4 (4)
6 (6)
3 (3)
2 (2)
Matthew Oakeshott
4 (4)
6 (6)
N/A
N/A
David Smith
4 (4)
2 (2)
3 (3)
2 (2)
Jo Valentine
4 (4)
2 (2)
3 (3)
2 (2)
Lucy Winterburn
3
4 (4)
2 (2)
3 (3)
2 (2)
61
Value and Indexed Property Income Trust PLC
• Annual Report and Financial Statements 2024
The Nomination Committee has undertaken a formal performance
evaluation of the Chairman, and led by the Senior Independent Director, of
the other Directors and the Board as a whole. The Committee considered
having an externally facilitated board evaluation, but after discussion,
agreed that the current process worked well based on the size of the Board.
Directors’ terms of appointment and policy on tenure
All Directors are appointed for an initial period of three years, subject to
re-election and Companies Act provisions and, in accordance with the
Articles, stand for election at the first AGM following their appointment.
The Articles state that Directors must offer themselves for re-election at
least once every three years. Notwithstanding the Articles, the Board has
determined that in accordance with the AIC Code, all Directors should be
subject to annual re-election.
The Board subscribes to the view expressed in the AIC Code that long-
serving Directors should not be prevented from forming part of an
independent majority. It does not consider that a Director’s tenure
necessarily reduces his or her ability to act independently and, following a
formal performance evaluation, believes that each Director is independent
in character and judgement and that there are no relationships or
circumstances which are likely to affect the judgement of any Director. The
Board’s policy on tenure is that continuity and experience are considered to
add significantly to the strength of the Board and, as such, no limit on the
overall length of service of any of the Company’s Directors, including the
Chairman, has been imposed. The policy on tenure and the independence
of each Director is reviewed on an annual basis, before the re-election
of any Director is recommended, and the Board considers the need for
regular refreshment of the Directors prior to doing so. The Company has no
executive Directors or employees.
62
Value and Indexed Property Income Trust PLC
• Annual Report and Financial Statements 2024
STATEMENT OF CORPORATE GOVERNANCE
CONTINUED
Committees
Each of the Committees has been established with written terms of reference.
The terms of reference of each of the Committees, which are available
on request from the Registered Office of the Company, are reviewed and
reassessed for their adequacy at least annually.
Audit and Management Engagement Committee
Information regarding the composition, responsibilities and activities of the
Audit and Management Engagement Committee is detailed in the Report of
the Audit and Management Engagement Committee on pages 67 to 70.
Nomination Committee
The Nomination Committee comprises all of the independent Directors
and is chaired by David Smith. Matthew Oakeshott is not a member of
the Nomination Committee as he is not considered by the Board to be
independent. As the Board has not established a Remuneration Committee,
the Nomination Committee fulfils the functions of a remuneration committee
in relation to setting the level of Directors’ fees and the remuneration policy.
The Nomination Committee met twice during the year. The Committee makes
recommendations to the Board on the following matters:
•
the evaluation of the performance of the Board and its Committees;
•
reviewing the Board structure, size, composition and age profile
(including the skills, knowledge, experience and diversity (including
gender);
•
succession planning;
•
the identification and nomination of candidates to fill Board vacancies, as
and when they arise, for the approval of the Board;
•
the tenure and re-appointment of any non-executive Director on an
annual basis;
•
proposals for the re-election by Shareholders of any Director on an annual
basis, having due regard to the provisions of the AIC Code, the Director’s
performance and ability to contribute to the Board and long-term success
of the Company;
•
the continuation in office of any Director at any time;
•
the appointment of any Director to another office, such as Chairman of
the Audit and Management Engagement Committee, other than to the
position of Chairman; and
•
reviewing the level of Directors’ fees.
63
Value and Indexed Property Income Trust PLC
• Annual Report and Financial Statements 2024
Board diversity policy
The Board recognises the importance of having a range of skilled,
experienced individuals with the right knowledge represented on the Board
(and the Committees of the Board) in order to allow it to fulfil its obligations.
The Board also recognises the benefits and is supportive of the principle
of diversity in its recruitment of new Board members. The Board will not
display any bias for age, gender, education, professional background,
ethnicity, sexual orientation, disability and socio-economic backgrounds in
considering the appointment of its Directors. In view of its size, the Board
will continue to ensure that all appointments are made on the basis of merit
against the specification prepared for each appointment and the Board does
not, therefore, consider it appropriate to set measurable objectives in relation
to its diversity.
At 31 March 2024, there were three male and two female Directors on the
Board. One of the male Directors is Chairman of the Company; one of
the male Directors is Chair of the Audit and Management Engagement
Committee and Chair of the Nomination Committee; and one of the female
directors is the Company’s Senior Independent Director. None of the
Directors is from a minority ethnic background.
In accordance with the FCA’s Listing Rule 9.8.6R (9)(a), the table below reports
on gender identity or sex and ethnic background within the Board as at 31
March 2024.
Number
of Board
Members
% of the
Board
Number
of senior
positions on
the Board
(CEO, CFO, SID
and Chair)
Number in
Executive
Management
% of
Executive
Management
Men
3
60
1
N/A
N/A
Women
2
40
1
N/A
N/A
White British
or other White
(including
minority-white
groups)
5
100
2
N/A
N/A
Minority ethnic
background
0
0
0
N/A
N/A
1.
The Company complies with the FCA’s diversity target that 40% of individuals on the Board are
to be women.
2.
The Company complies with the FCA’s diversity target that one of the senior positions on the
Board is to be held by a woman.
3.
The Company does not comply currently with the FCA’s diversity target that requires one
individual on the Board to be from a minority ethnic background. As referred to above, in view
of its size, the Board will continue to ensure that all appointments are made on the basis of
merit against the specification prepared for each appointment and, in doing so, the Board will
seek to meet the FCA’s diversity targets.
64
Value and Indexed Property Income Trust PLC
• Annual Report and Financial Statements 2024
STATEMENT OF CORPORATE GOVERNANCE
CONTINUED
External agencies
The Board has contractually
delegated to external agencies,
certain services: the depositary and
custodial services (which include
the safeguarding of assets); the
registration services; and the day-
to-day accounting and company
secretarial requirements. Each of
these contracts was entered into
after full and proper consideration
by the Board of the quality and
cost of services offered. The Board
receives and considers reports from
the external agencies on a regular
basis. In addition, ad hoc reports
and information are supplied to the
Board as requested.
As the AIFM, VIS has responsibility
for the overall investment
management and risk management
of the assets of the Company. VIS
has contractually delegated its day-
to-day investment management
responsibilities for the property
portfolio to OLIM Property (the
Investment Manager). The delegation
by VIS of its investment management
responsibilities is in accordance
with the delegation requirements
of the AIFMD. The Investment
Manager remains subject to the
supervision and direction of VIS and
is responsible to VIS and ultimately
to the Company in regard to the
management of the investment
of the assets of the Company in
accordance with the Company’s
investment objective and policy. VIS
has established a Risk Committee to
keep under review the effectiveness
of the Company’s internal control
and risk management systems
and procedures and to identify,
measure, manage and monitor
the risks identified as affecting
the Company’s business.
Corporate governance
and stewardship
The UK Stewardship Code 2020
sets high stewardship standards for
those investing money on behalf of
UK savers and pensioners, such as
asset owners and asset managers
(and those that support them).
Stewardship is the responsible
allocation, management and
oversight of capital to create
long-term value for clients and
beneficiaries, leading to sustainable
benefits for the economy, the
environment and society.
Socially responsible
investment policy
The Directors and the Investment
Manager are aware of their duty
to act in the best interests of the
Company and acknowledge that there
are risks associated with investment
in properties with tenants who fail to
conduct their business in a socially
responsible manner. Therefore,
the Directors and the Investment
Manager take account of the social,
environmental and ethical factors
that may affect the performance or
value of the Company’s investments.
The Directors and the Investment
Manager believe that a business
run in the long-term interests of
its shareholders should manage its
relationships with its employees,
suppliers and customers and behave
responsibly towards the environment
and society as a whole.
65
Value and Indexed Property Income Trust PLC
• Annual Report and Financial Statements 2024
Communication with shareholders
The Company places a great deal of importance on communication with its
Shareholders, all of whom are encouraged to attend and participate in the
AGM, as this is the key forum for communication with Shareholders. The
AGM is an event that all Shareholders are welcome to attend and participate
in. The Notice of Annual General Meeting sets out the business of the AGM
and the Resolutions are explained more fully in the Directors’ Report and
in the Directors’ Remuneration Report. Separate Resolutions are proposed
for each substantive issue and Shareholders have the opportunity to put
questions to the Board and Investment Manager. The results of proxy voting
are relayed to Shareholders after the Resolutions have been voted on by a
show of hands. Nominated persons, often the beneficial owners of shares
held for them by nominee companies, may attend shareholder meetings and
are usually invited to contact the registered shareholder, normally a nominee
company, in the first instance in order to be nominated to attend the meeting
and to vote in respect of the shares held for them.
In addition, both the Chairman and Senior Independent Director are available
to meet major shareholders. Shareholders may contact the Directors
by writing to the Chairman at the Registered Office. The address for the
Registered Office can be found on page 137.
The Board aims to post the Annual Report to Shareholders at least twenty
business days before the AGM. Annual and Interim Reports and Financial
Statements are distributed to Shareholders and other parties who have an
interest in the Company’s performance.
Shareholders and potential investors may obtain up-to-date information on
the Company through the Investment Manager and the Company Secretary.
In order to ensure that the Directors develop an understanding of the views
of Shareholders, correspondence between Shareholders and the Investment
Manager or the Chairman is copied to the Board.
The Company’s web pages are hosted on the Manager’s website, and
can be visited at www.olimproperty.co.uk/value-and-indexed-property-
income-trust.html from where Annual and Interim Reports, Company
Announcements and other information on the Company can be viewed,
printed or downloaded.
Accountability and audit
The Statement of Directors’ Responsibilities in respect of the Financial
Statements is on page 66 and the Statement of Going Concern and the
Viability Statement are included in the Directors’ Report on pages 45 and 46.
The Independent Auditor’s Report is on pages 71 to 79.
By order of the Board
Maven Capital Partners UK LLP
Company Secretary
11 June 2024
66
Value and Indexed Property Income Trust PLC
• Annual Report and Financial Statements 2024
STATEMENT OF DIRECTORS’ RESPONSIBILITIES
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
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
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
67
Value and Indexed Property Income Trust PLC
• Annual Report and Financial Statements 2024
REPORT OF THE AUDIT AND MANAGEMENT ENGAGEMENT COMMITTEE
The Audit and Management Engagement Committee is chaired by David
Smith. The Committee comprises all of the independent Directors. Matthew
Oakeshott is not a member of the Committee as he is not considered by the
Directors to be independent. The Board is satisfied that at least one member
of the Committee has recent and relevant financial experience, and that the
Committee as a whole has competence relevant to the sector in which the
Company operates.
Responsibilities
The principal responsibilities of the Committee include:
•
the review of the effectiveness of the internal control environment of the
Company, including the receipt of reports from the Investment Manager
and the Administrator on a regular basis;
•
the integrity of the Interim and Annual Reports and Financial Statements
and reviewing any significant financial reporting judgements contained
therein;
•
the review of the terms of appointment of the Auditor, together with its
remuneration;
•
the review of the scope and results of the audit and the independence and
objectivity of the Auditor;
•
the review of the Auditor’s Board Report and any required response;
•
meetings with representatives of the Investment Manager;
•
the review of the AIFM agreement and investment management
agreement;
•
providing advice on whether 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 Company’s position
and performance, business model and strategy; and
•
making appropriate recommendations to the Board.
Internal control and risk management
The Directors are ultimately responsible for the Company’s system of internal
controls and risk management and for reviewing its effectiveness. Following
publication by the FRC of “Guidance on Risk Management, Internal Control
and Related Financial and Business Reporting” (the FRC Guidance), the
Directors confirm that there is an ongoing process for identifying, evaluating
and managing the principal and emerging risks faced by the Company.
This process, which has been in place for the year under review and up
to the date of approval of this Annual Report and Financial Statements,
is regularly reviewed by the Board and accords with the FRC Guidance.
68
Value and Indexed Property Income Trust PLC
• Annual Report and Financial Statements 2024
REPORT OF THE AUDIT AND MANAGEMENT ENGAGEMENT COMMITTEE
CONTINUED
The Directors have, in tandem with VIS, reviewed the effectiveness of the
system of internal controls and risk management. In particular, the Directors
have reviewed and updated the process for identifying and evaluating the
principal and emerging risks affecting the Company and the policies by
which these risks are managed. The significant risks faced by the Company
are as follows:
•
Financial;
•
Operational; and
•
Compliance.
The key components designed to provide effective internal controls are
outlined below:
•
Forecasts and management accounts are prepared which allow the
Directors to assess the Company’s activities and review its performance;
the emphasis is on obtaining the relevant degree of assurance and not
merely reporting by exception;
•
OLIM Property regularly reports to VIS and to the Directors on the
investment portfolio;
•
OLIM Property’s Compliance Officer keeps OLIM Property’s operations
under review;
•
VIS regularly reports to the Directors on compliance with the AIFMD;
•
written agreements are in place which specifically define the roles and
responsibilities of VIS, OLIM Property and other third party service
providers; and
•
at its meeting in May 2024, the Audit and Management Engagement
Committee carried out its annual assessment of internal controls and
risk management for the year ended 31 March 2024 by considering
documentation from OLIM Property and Maven Capital Partners UK LLP
and by taking account of events since 31 March 2024.
Internal control systems are designed to meet the Company’s particular
needs and the risks to which it is exposed. Accordingly, the internal control
systems are designed to manage rather than eliminate the risk of failure to
achieve business objectives and by their nature can only provide reasonable
and not absolute assurance against misstatement and loss.
Assessment of key risks
The Company’s policy is to invest in directly held UK commercial property
and cash or near cash securities.
As the property portfolio is a significant element of the Financial Statements,
the recognition and valuation of the property portfolio is, therefore, a key risk
that requires the particular attention of the Committee.
Specifically, the risk is that investments are not recognised and measured
in line with the Company’s stated accounting policy on the valuation of the
property portfolio. Similarly, as rental income is a major source of revenue for
the Company and a significant element of the Statement of Comprehensive
Income, the recognition of rental income is a further risk that requires the
particular attention of the Committee.
69
Value and Indexed Property Income Trust PLC
• Annual Report and Financial Statements 2024
Valuation, existence and ownership of the investment
portfolio - How the risk was addressed
The Company uses the services of an independent depositary and custodian,
BNP Paribas Securities Services S.A. for the safe keeping of the Company’s
assets. The title deeds for the property portfolio are held by the Company’s
lawyers to the order of the Company. An annual internal control report is
received from the Depositary and Custodian which provides details of the
Depositary and Custodian’s control environment.
The reconciliation of the records held by the Depositary and Custodian
(and by the Company’s lawyers in the case of the title deeds) to the records
maintained by the Company’s administrator is reviewed and tested by the
Independent Auditor. The property portfolio is reviewed by OLIM Property
regularly. Management accounts are prepared quarterly and considered at
the quarterly meetings of the Board.
The valuation of the property portfolio is undertaken in accordance with the
Company’s stated accounting policy as set out in Note 1(k) to the Financial
Statements on page 93.
The Committee reviews and challenges the valuation of the investment
properties. This includes review of the valuation report prepared by
independent professional valuers. In addition, the Committee reviews the
Financial Statements disclosures in line with the reporting framework.
The Committee satisfied itself that there were no issues associated with the
existence and ownership of the Company’s investments which required to be
addressed.
Rental income recognition - How the risk was addressed
The recognition of rental income is undertaken in accordance with
accounting policy Note 1(e) to the Financial Statements on page 92. The
management accounts are reviewed by the Board on a quarterly basis and
discussion takes place with the Investment Manager at the quarterly Board
Meetings regarding the revenue generated from rental income. The Directors
are satisfied that the level of income recognised is in line with revenue
estimates. The Committee concluded that there were no further issues
associated with rental income recognition which required to be addressed.
Review of investment manager and risk reporting
The Committee met three times during the year under review, in May,
August and November 2023. At the meetings in May and November 2023,
the Committee considered the key risks detailed above and the
corresponding control and risk reports provided by the Investment
Manager and the Company Secretary. No significant weaknesses in the
control environment were identified and it was also noted that there had
not been any adverse comment from the Auditor and that the Auditor had
not identified any significant issues in its audit report. The Committee,
therefore, concluded that there were no significant issues which required
to be reported to the Board.
Also, at its meeting in May 2023, the Committee reviewed, for
recommendation to the Board, the Audit Report from the Independent
Auditor and the draft Annual Report and Financial Statements for the year
ended 31 March 2023, along with the amount of the final dividend for the year
then ended.
70
Value and Indexed Property Income Trust PLC
• Annual Report and Financial Statements 2024
At its meeting in August 2023, as
part of its annual evaluation of
audit services, including the overall
performance, cost effectiveness and
general relationship with the external
Auditor, the Audit and Management
Engagement Committee agreed to
conduct an audit tender selection
process. Following the audit tender
selection process, RSM UK Audit
LLP (RSM) were appointed as the
Auditor effective from 14 November
2023. RSM has conducted the
audit of the Company’s financial
statements for the year to 31 March
2024. The appointment of RSM as
auditor for the year ending 31 March
2025, will be subject to approval by
Shareholders at the 2024 Annual
General Meeting of the Company.
At its meeting in November 2023,
the Committee reviewed the Half-
Yearly Report for the period to 30
September 2023.
Subsequent to 31 March 2024, the
Committee considered the draft
Annual Report and Financial
Statements for the year ended 31
March 2024, and provided advice
to the Board that it considered that
the Annual Report and Financial
Statements, taken as a whole, was
fair, balanced and understandable
and provided the information
necessary for Shareholders to
assess the Company’s position
and performance, business model
and strategy. The Committee also
reviewed the performance of the
Investment Manager and the terms
and conditions of its appointment
and concluded that the performance
of the Investment Manager was
satisfactory and that the continued
appointment of the Investment
Manager was in the best interests of
Shareholders as a whole.
REPORT OF THE AUDIT AND MANAGEMENT ENGAGEMENT COMMITTEE
CONTINUED
Review of effectiveness of
external auditor
As part of its annual review of audit
services, the Committee reviews
the performance, cost effectiveness
and general relationship with the
external Auditor.
In addition, the Committee reviews
the independence and objectivity of
the Auditor. Key elements of these
reviews include separate meetings
with the Auditor and consideration
of the completeness and accuracy of
RSM’s reporting.
The Auditor’s Report is on pages 71
to 79. Alan Aitchison of RSM is the
Senior Statutory Auditor responsible
for the audit and RSM will rotate the
Senior Statutory Auditor every five
years. Alan Aitchison was appointed
as Senior Statutory Auditor for the
Company during the year to 31 March
2024 and will be rotated for the audit
for the year to 31 March 2029. Details
of the amounts paid to the Auditor for
audit services are set out in Note 4 to
the Financial Statements.
Shareholders are asked to
approve the appointment, and the
Directors’ responsibility for the
remuneration, of the Auditor at
each AGM. No non-audit services
were provided to the Company by
RSM during the year under review.
There are currently no contractual
obligations which restrict the
Committee’s choice of Auditor.
The Committee is mindful of the
requirement to conduct an audit
tender at least every 10 years and to
rotate the statutory auditor after a
maximum period of twenty years.
The Committee will continue to keep
the matter of tenure of the Auditor
under review.
The Board has concluded that RSM
is independent of the Company and
that a Resolution for the appointment
of RSM as Auditor should be put to
the 2024 AGM.
David Smith
Director
11 June 2024
71
Value and Indexed Property Income Trust PLC
• Annual Report and Financial Statements 2024
INDEPENDENT AUDITOR’S REPORT
Independent auditor’s report to the members of Value
and Indexed Property Income Trust PLC
Opinion
We have audited the financial statements of Value and Indexed Property
for the year ended 31 March 2024, which comprise the Group Statement of
Comprehensive Income, Company Statement of Comprehensive Income,
Group Statement of Financial Position, Company Statement of Financial
Position, Group Statement of Cashflows, Company Statement of Cashflows,
Group and Company Statement of Changes in Equity, and notes to the
financial statements, including significant accounting policies. The
financial reporting framework that has been applied in the preparation
of the group financial statements is applicable law and UK-adopted
International Accounting Standards. The financial reporting framework
that has been applied in the preparation of the parent company financial
statements is applicable law and UK-adopted International Accounting
Standards and, as regards the parent company financial statements, as
applied in accordance with the provisions of the Companies Act 2006.
In our opinion:
•
the financial statements give a true and fair view of the state of
the group’s and of the parent company’s affairs as at 31 March
2024 and of the group’s loss for the year then ended;
•
the group financial statements have been properly prepared in
accordance with UK-adopted International Accounting Standards;
•
the parent company financial statements have been properly prepared
in accordance with UK-adopted International Accounting Standards
and as applied in accordance with the Companies Act 2006; and
•
the financial statements have been prepared in accordance
with the requirements of the Companies Act 2006.
Basis for opinion
We conducted our audit in accordance with International Standards on
Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under
those standards are further described in the Auditor’s responsibilities
for the audit of the financial statements section of our report. We are
independent of the group and parent company in accordance with the ethical
requirements that are relevant to our audit of the financial statements in
the UK, including the FRC’s Ethical Standard as applied to listed public
interest entities and we have fulfilled our other ethical responsibilities in
accordance with these requirements. We believe that the audit evidence we
have obtained is sufficient and appropriate to provide a basis for our opinion.
72
Value and Indexed Property Income Trust PLC
• Annual Report and Financial Statements 2024
INDEPENDENT AUDITOR’S REPORT
CONTINUED
Summary of our audit approach
Key audit matters
Group
•
Valuation of investment properties
Parent Company
•
None
Materiality
Group
•
Overall materiality: £1,470,000
(2023: £1,505,000)
•
Performance materiality: £961,000 (2023: £980,000)
Parent Company
•
Overall materiality: £1,469,999 (2023: £1,500,00)
•
Performance materiality: £955,500 (2023: £980,000)
Scope
Our audit procedures covered 100% of revenue, 100% of
total assets and 100% of profit before tax.
Key audit matters
Key audit matters are those matters that, in our professional judgment,
were of most significance in our audit of the group and parent company
financial statements of the current period and include the most significant
assessed risks of material misstatement (whether or not due to fraud) we
identified, including those which had the greatest effect on the overall audit
strategy, the allocation of resources in the audit and directing the efforts of
the engagement team. These matters were addressed in the context of our
audit of the group and parent company financial statements as a whole, and
in forming our opinion thereon, and we do not provide a separate opinion on
these matters.
Valuation of investment properties
Key audit
matter
description
Investment property is held in the financial statements
at fair value. There are independent valuations which are
carried out by a qualified surveyor.
The Group owns a portfolio of investment properties,
which include supermarkets, hospitality, leisure,
industrial and retail properties.
The valuations depend on inputs provided by management
and on criteria which are subjective, despite the
involvement of an independent valuation expert.
This is a key audit matter assessment because the
Directors’ assessment of the value of investment
properties is considered a significant audit risk due to
the magnitude of the total amount, the potential impact
of the movement in value on the reported results and the
subjectivity of the valuation process.
73
Value and Indexed Property Income Trust PLC
• Annual Report and Financial Statements 2024
Valuation of investment properties
How the matter
was addressed
in the audit
In response to this key audit matter, the audit procedures
we performed included:
Auditing the independent valuations of investment
properties to ensure they have been prepared on a
consistent basis for all properties and are appropriate,
and correctly recorded in the financial statements in line
with accounting standards. We have also ensured that any
fluctuations in value are correctly accounted for through
the Statement of Comprehensive Income. We assessed
the external valuers’ qualifications and expertise and
considered their terms of engagement, we also considered
their objectivity and any other existing relationships with
the group and concluded that there was no evidence that
the valuer’s objectivity has been compromised.
We engaged a property valuation specialist, as our
auditor’s expert, and we identified 35 properties for
detailed testing based on a sample of the individually
material properties, or where the current year valuation
movement fell out with current market expectations or the
yield fell out with expectations from our overall review of
the portfolio.
We discussed and challenged the valuation of 20 of
these properties with the valuer directly. The valuer
demonstrated a detailed knowledge of each property,
the geographical location, the tenant status and the
overall asset desirability. We corroborated the additional
information provided to support these movements.
In addition, our auditor’s expert carried out a review of
the valuations of the remaining 15 properties. Our expert
considered the specific inputs to these valuations and also
considered the comparable transaction evidence that was
used by management’s expert in preparing their valuation.
We tested a sample of the inputs used by the valuer and
ensured these reflected the correct inputs for a sample
of properties.
We audited the accuracy and completeness of the
disclosures in the financial statements.
Key
observations
Based on the procedures performed, we found the
investment valuations to be within a reasonable range and
the assumptions used in the valuations to be appropriate.
74
Value and Indexed Property Income Trust PLC
• Annual Report and Financial Statements 2024
INDEPENDENT AUDITOR’S REPORT
CONTINUED
Our application of materiality
When establishing our overall audit strategy, we set certain thresholds which
help us to determine the nature, timing and extent of our audit procedures.
When evaluating whether the effects of misstatements, both individually
and on the financial statements as a whole, could reasonably influence the
economic decisions of the users we take into account the qualitative nature
and the size of the misstatements. Based on our professional judgement, we
determined materiality as follows:
Group
Parent company
Overall materiality
£1,470,000
(2023: £1,505,000)
£1,469,999
(2023: £1,500,00)
Basis for determining
overall materiality
1% of Total assets
1% of Total assets
Rationale for
benchmark applied
The key users of the
financial statements are
primarily focussed on the
valuation of the property
portfolio which drives the
value of the total assets.
The key users of the
financial statements are
primarily focussed on the
valuation of the property
portfolio which drives the
value of the total assets.
Performance materiality
£961,000 (2023: £980,000)
£955,500 (2023: £980,000)
Basis for determining
performance materiality
65% of overall materiality
65% of overall materiality
Reporting of
misstatements to the
Audit and Management
Engagement Committee
Misstatements in
excess of £73,900 and
misstatements below
that threshold that, in our
view, warranted reporting
on qualitative grounds.
Misstatements in
excess of £73,400 and
misstatements below
that threshold that, in our
view, warranted reporting
on qualitative grounds.
The Statement of Comprehensive Income has been audited to a lower
performance materiality based on 5% of Operating Profit (before gains and
losses on property assets and other investments) for the financial year to
ensure adequate coverage of these values. This is calculated as £297,000 for
the year ended 31 March 2024.
We have elected to use Total assets (rather than 1% of Investment Properties
as used by the previous auditors) as a benchmark for materiality. This
is because this benchmark is extremely relevant to the key users of the
financial statements.
An overview of the scope of our audit
The group consists of two components, both of which are based in the UK.
The coverage achieved by our audit procedures was:
Number of
components
Revenue
Total
assets
Profit
before tax
Full scope audit
2
100%
100%
100%
Total
2
100%
100%
100%
75
Value and Indexed Property Income Trust PLC
• Annual Report and Financial Statements 2024
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the Directors’
use of the going concern basis of accounting in the preparation of the
financial statements is appropriate. Our evaluation of the Directors’
assessment of the group’s and parent company’s ability to continue to adopt
the going concern basis of accounting included reviewing and evaluating
management’s latest forecasts and plans, considering the appropriateness
and sensitivity of the key assumptions, and reviewing the key terms of debt
facilities.
Based on the work we have performed, we have not identified any
material uncertainties relating to events or conditions that, individually
or collectively, may cast significant doubt on the group’s or the parent
company’s ability to continue as a going concern for a period of at least twelve
months from when the financial statements are authorised for issue.
In relation to the entity reporting on how they have applied the AIC Code of
Corporate Governance, we have nothing material to add or draw attention
to in relation to the Directors’ statement in the financial statements about
whether the Directors considered it appropriate to adopt the going concern
basis of accounting.
Our responsibilities and the responsibilities of the Directors with respect to
going concern are described in the relevant sections of this report.
Other information
The other information comprises the information included in the Annual
Report other than the financial statements and our Auditor’s Report thereon.
The Directors are responsible for the other information contained within the
Annual Report. Our opinion on the financial statements does not cover the
other information and, except to the extent otherwise explicitly stated in our
report, we do not express any form of assurance conclusion thereon.
Our responsibility is to read the other information and, in doing so,
consider whether the other information is materially inconsistent with the
financial statements or our knowledge obtained in the course of the audit or
otherwise appears to be materially misstated. If we identify such material
inconsistencies or apparent material misstatements, we are required to
determine whether this gives rise to a material misstatement in the financial
statements themselves. If, based on the work we have performed, we
conclude that there is a material misstatement of this other information, we
are required to report that fact.
We have nothing to report in this regard.
Opinions on other matters prescribed by the Companies
Act 2006
In our opinion, the part of the Directors’ Remuneration Report to be audited
has been properly prepared in accordance with the Companies Act 2006.
In our opinion, based on the work undertaken in the course of the audit:
•
the information given in the Strategic Report and the Directors’ Report
for the financial year for which the financial statements are prepared is
consistent with the financial statements; and
•
the Strategic Report and the Directors’ Report have been prepared in
accordance with applicable legal requirements.
76
Value and Indexed Property Income Trust PLC
• Annual Report and Financial Statements 2024
INDEPENDENT AUDITOR’S REPORT
CONTINUED
Matters on which we
are required to report
by exception
In the light of the knowledge
and understanding of the group
and the parent company and
their environment obtained
in the course of the audit, we
have not identified material
misstatements in the Strategic
Report or the Directors’ Report.
We have nothing to report in
respect of the following matters in
relation to which the Companies
Act 2006 requires us to report
to you if, in our opinion:
•
adequate accounting records
have not been kept by the
parent company, or returns
adequate for our audit have
not been received from
branches not visited by us; or
•
the parent company financial
statements and the part of the
Directors’ Remuneration Report
to be audited are not in agreement
with the accounting records and
returns; or
•
certain disclosures of Directors’
remuneration specified by law are
not made; or
•
we have not received all the
information and explanations we
require for our audit.
Corporate governance
statement
We have reviewed the Directors’
statement in relation to going
concern, longer-term viability
and that part of the Corporate
Governance Statement relating to the
parent company’s compliance with
the provisions of the AIC Code of
Corporate Governance specified for
our review by the Listing Rules.
Based on the work undertaken as
part of our audit, we have concluded
that each of the following elements
of the Corporate Governance
Statement is materially consistent
with the financial statements and our
knowledge obtained during the audit:
•
Directors’ statement with
regards the appropriateness
of adopting the going concern
basis of accounting and
any material uncertainties
identified set out on page 45;
•
Directors’ explanation as
to their assessment of the
group’s prospects, the period
this assessment covers and
why the period is appropriate
set out on page 46;
•
Director’s statement on whether
it has a reasonable expectation
that the group will be able to
continue in operation and meets
its liabilities set out on page 45;
•
Directors’ statement on fair,
balanced and understandable
set out on page 66;
•
Board’s confirmation that it has
carried out a robust assessment
of the emerging and principal
risks set out on page 46;
•
Section of the Annual Report
that describes the review of
effectiveness of risk management
and internal control systems set
out on pages 67 and 68; and
•
Section describing the work
of the Audit and Management
Engagement Committee set
out on pages 67 to 70.
77
Value and Indexed Property Income Trust PLC
• Annual Report and Financial Statements 2024
Responsibilities of directors
As explained more fully in the
Directors’ Responsibilities Statement
set out on page 66, the directors are
responsible for the preparation of the
financial statements and for being
satisfied that they give a true and fair
view, and for such internal control as
the Directors determine is necessary
to enable the preparation of financial
statements that are free from
material misstatement, whether due
to fraud or error.
In preparing the financial
statements, the Directors are
responsible for assessing the
group’s and the parent company’s
ability to continue as a going
concern, disclosing, as applicable,
matters related to going concern
and using the going concern basis
of accounting unless the Directors
either intend to liquidate the
group or the parent company or
to cease operations, or have no
realistic alternative but to do so.
Auditor’s responsibilities
for the audit of the
financial statements
Our objectives are to obtain
reasonable assurance about whether
the financial statements as a whole
are free from material misstatement,
whether due to fraud or error, and
to issue an auditor’s report that
includes our opinion. Reasonable
assurance is a high level of
assurance, but is not a guarantee that
an audit conducted in accordance
with ISAs (UK) will always detect
a material misstatement when it
exists. Misstatements can arise from
fraud or error and are considered
material if, individually or in the
aggregate, they could reasonably be
expected to influence the economic
decisions of users taken on the basis
of these financial statements.
The extent to which the audit
was considered capable of
detecting irregularities,
including fraud
Irregularities are instances of
non-compliance with laws and
regulations. The objectives of
our audit are to obtain sufficient
appropriate audit evidence
regarding compliance with laws and
regulations that have a direct effect
on the determination of material
amounts and disclosures in the
financial statements, to perform
audit procedures to help identify
instances of non-compliance with
other laws and regulations that
may have a material effect on
the financial statements, and to
respond appropriately to identified
or suspected non-compliance
with laws and regulations
identified during the audit.
In relation to fraud, the objectives of
our audit are to identify and assess
the risk of material misstatement of
the financial statements due to fraud,
to obtain sufficient appropriate audit
evidence regarding the assessed
risks of material misstatement
due to fraud through designing
and implementing appropriate
responses and to respond
appropriately to fraud or suspected
fraud identified during the audit.
However, it is the primary
responsibility of management,
with the oversight of those charged
with governance, to ensure that the
entity's operations are conducted
in accordance with the provisions
of laws and regulations and for the
prevention and detection of fraud.
78
Value and Indexed Property Income Trust PLC
• Annual Report and Financial Statements 2024
INDEPENDENT AUDITOR’S REPORT
CONTINUED
In identifying and assessing risks of material misstatement in respect of
irregularities, including fraud, the group audit engagement team:
•
obtained an understanding of the nature of the industry and sector,
including the legal and regulatory framework that the group and
parent company operate in and how the group and parent company are
complying with the legal and regulatory framework;
•
inquired of management, and those charged with governance, about their
own identification and assessment of the risks of irregularities, including
any known actual, suspected or alleged instances of fraud;
•
discussed matters about non-compliance with laws and regulations
and how fraud might occur including assessment of how and where the
financial statements may be susceptible to fraud.
The most significant laws and regulations were determined as follows:
Legislation / Regulation
Additional audit procedures performed by the
Group audit engagement team included
IFRS/UK adopted IAS and
Companies Act 2006
Review of the financial statement disclosures and
testing to supporting documentation;
Completion of disclosure checklists to identify areas
of non-compliance
Tax compliance regulations
Inspection of advice received from external
tax advisors
Risk
Audit procedures performed by the audit
engagement team
Revenue recognition
Performed substantive testing by agreeing rental
income for each property to supporting invoices;
Tested the completeness of rental income by
confirming that each property received the correct
amount of rental income in the year; and
Reviewed the accuracy and completeness of
disclosures in the Annual Report in relation to revenue.
Management override
of controls
Testing the appropriateness of journal entries and
other adjustments;
Assessing whether the judgements made in
making accounting estimates are indicative of a
potential bias; and
Evaluating the business rationale of any significant
transactions that are unusual or outside the normal
course of business.
A further description of our responsibilities for the audit of the financial
statements is located on the Financial Reporting Council’s website at:
www.frc.org.uk/auditorsresponsibilities. This description forms part of our
Auditor’s Report.
The areas that we identified as being susceptible to material misstatement
due to fraud were:
79
Value and Indexed Property Income Trust PLC
• Annual Report and Financial Statements 2024
Other matters which we are
required to address
Following the recommendation of the
Audit and Management Engagement
Committee, we were appointed by
the Directors on 14 November 2023
to audit the financial statements
for the year ended 31 March 2024
and subsequent financial periods.
The period of total uninterrupted
consecutive appointments
is 1 year, covering the year
ended 31 March 2024.
The non-audit services prohibited
by the FRC’s Ethical Standard
were not provided to the group
or the parent company and
we remain independent of the
group and the parent company
in conducting our audit.
Our audit opinion is consistent
with the additional report to
the Audit and Management
Engagement Committee in
accordance with ISAs (UK).
Use of our report
This report is made solely to the
Company’s members, as a body, in
accordance with Chapter 3 of Part
16 of the Companies Act 2006. Our
audit work has been undertaken
so that we might state to the
Company’s members those matters
we are required to state to them
in an auditor’s report and for no
other purpose. To the fullest extent
permitted by law, we do not accept
or assume responsibility to anyone
other than the company and the
Company’s members as a body, for
our audit work, for this report, or for
the opinions we have formed.
Alan Aitchinson
(Senior Statutory Auditor)
For and on behalf of RSM UK Audit
LLP, Statutory Auditor
Chartered Accountants
Centenary House
69 Wellington Street
Glasgow
G2 6HG
11 June 2024
80
Milton Keynes
Financial
Statements
81
82
Value and Indexed Property Income Trust PLC
• Annual Report and Financial Statements 2024
GROUP STATEMENT OF COMPREHENSIVE INCOME
Year ended 31 March 2024
Year ended 31 March 2023
Restated*
Note
Revenue
£’000
Capital
£’000
Total
£’000
Revenue
£’000
Capital
£’000
Total
£’000
Income
Rental income
2
Investment income
2
Other income
2
Gains and losses
on investments
Realised (losses)/ gains
on held-at-fair-value
investments and
investment properties
9
(137 )
(137 )
Unrealised (losses)/ gains
on held-at-fair-value
investments and
investment properties
9
(11,480 )
(11,480 )
(24,563 )
(24,563 )
Total income
(11,617 )
(2,551 )
(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
(11,617 )
(6,450 )
(29,386 )
(24,342 )
Taxation
6
(1,251 )
(1,251 )
(535 )
Profit/(loss) attributable to
equity shareholders of
parent company
(11,617 )
(7,701 )
(27,961 )
(23,452 )
Earnings per Ordinary
Share (pence)
7
(27.11 )
(17.97 )
(64.62 )
(54.20 )
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 3.6 p per share, making a total dividend of 13.2 p
per share for the year ended 31 March 2024 (2023: 12.9 p per share) which, if approved by
Shareholders, will be payable on 26 July 2024 (see Note 8).
The Notes on pages 92 to 121 form part of these Financial Statements.
* As explained in Note 24 to the Financial Statements on pages 115 to 121 of this Annual Report.
83
Value and Indexed Property Income Trust PLC
• Annual Report and Financial Statements 2024
COMPANY STATEMENT OF COMPREHENSIVE INCOME
Year ended 31 March 2024
Year ended 31 March 2023
Restated*
Note
Revenue
£’000
Capital
£’000
Total
£’000
Revenue
£’000
Capital
£’000
Total
£’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 properties
9
–
(137)
(137)
–
1,446
1,446
Unrealised (losses)/ gains
on held-at-fair-value
investments and
investment properties
9
–
(11,480)
(11,480)
–
(24,563)
(24,563)
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)
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 on pages 92 to 121 form part of these Financial Statements.
* As explained in Note 24 to the Financial Statements on pages 115 to 121 of this Annual Report.
84
Value and Indexed Property Income Trust PLC
• Annual Report and Financial Statements 2024
GROUP STATEMENT OF FINANCIAL POSITION
As at
31 March 2024
As at 31 March 2023
Restated
Note
£’000
£’000
£’000
£’000
Assets
Non current assets
Investment properties
9
Investments held at fair value through profit or loss
9
Deferred tax asset
6
Receivables
10
Current assets
Cash and cash equivalents
Receivables
10
Total assets
Current liabilities
Payables
11
(3,428 )
(2,376 )
(3,428 )
(2,376 )
Total assets less current liabilities
Non-current liabilities
Payables
12
(2,913 )
(2,845 )
Borrowings
12
(49,073 )
(49,000 )
(51,986 )
(51,845 )
Net assets
Equity attributable to equity shareholders
Called up share capital
14
Share premium
15
Retained earnings
16
Total equity
Net asset value per Ordinary Share (pence)
17
85
Value and Indexed Property Income Trust PLC
• Annual Report and Financial Statements 2024
These Financial Statements were approved by the Board on 11 June 2024 and were signed on its
behalf by:
John Kay
Chairman
The Notes on pages 92 to 121 form part of these Financial Statements.
As at 31 March 2022
Restated
£’000
£’000
Assets
Non current assets
Investment properties
Investments held at fair value through profit or loss
Deferred tax asset
Receivables
Current assets
Cash and cash equivalents
Receivables
Total assets
Current liabilities
Payables
(2,423 )
(2,423 )
Total assets less current liabilities
Non-current liabilities
Payables
(2,854 )
Borrowings
(56,723 )
(59,577 )
Net assets
Equity attributable to equity shareholders
Called up share capital
Share premium
Retained earnings
Total equity
Net asset value per Ordinary Share (pence)
86
Value and Indexed Property Income Trust PLC
• Annual Report and Financial Statements 2024
COMPANY STATEMENT OF FINANCIAL POSITION
As at
31 March 2024
As at 31 March 2023
Restated
Note
£’000
£’000
£’000
£’000
Assets
Non current assets
Investment properties
9
135,112
147,055
Investments held at fair value through profit or loss
9
200
200
135,312
147,255
Deferred tax asset
6
2,228
3,479
Receivables
10
5,792
6,209
143,332
156,943
Current assets
Cash and cash equivalents
2,495
2,073
Receivables
10
687
337
3,182
2,410
Total assets
146,514
159,353
Current liabilities
Payables
11
(3,428)
(2,376)
(3,428)
(2,376)
Total assets less current liabilities
143,086
156,977
Non-current liabilities
Payables
12
(2,913)
(2,845)
Borrowings
12
(49,073)
(49,000)
(51,986)
(51,845)
Net assets
91,100
105,132
Equity attributable to equity shareholders
Called up share capital
14
4,555
4,555
Share premium
15
18,446
18,446
Retained earnings
16
68,099
82,131
Total equity
91,100
105,132
Net asset value per Ordinary Share (pence)
17
213.53
244.42
87
Value and Indexed Property Income Trust PLC
• Annual Report and Financial Statements 2024
These Financial Statements were approved by the Board on 11 June 2024 and were signed on its
behalf by:
John Kay
Chairman
The Notes on pages 92 to 121 form part of these Financial Statements.
As at 31 March 2022
Restated
£’000
£’000
Assets
Non current assets
Investment properties
152,330
Investments held at fair value through profit or loss
27,071
179,401
Deferred tax asset
2,589
Receivables
5,934
187,924
Current assets
Cash and cash equivalents
4,953
Receivables
4,521
9,474
Total assets
197,398
Current liabilities
Payables
(2,423)
(2,423)
Total assets less current liabilities
194,975
Non-current liabilities
Payables
(2,854)
Borrowings
(56,723)
(59,577)
Net assets
135,398
Equity attributable to equity shareholders
Called up share capital
4,555
Share premium
18,446
Retained earnings
112,397
Total equity
135,398
Net asset value per Ordinary Share (pence)
310.85
88
Value and Indexed Property Income Trust PLC
• Annual Report and Financial Statements 2024
GROUP STATEMENT OF CASHFLOWS
Year ended
31 March 2024
Year ended
31 March 2023
Note
£’000
£’000
£’000
£’000
Cash flows from operating activities
Rental income received
Dividend income received
Interest and other income received
Operating expenses paid
(1,694 )
(1,974 )
Taxation paid
(29 )
Net cash inflow from operating activities
18
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
Sale of investment properties
Net cash inflow from investing activities
Cash flow from financing activities
Repayment of debenture stock
(26,380 )
Drawdown of loan
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
(2,880 )
Cash and cash equivalents at 1 April
Cash and cash equivalents at 31 March
The Notes on pages 92 to 121 form part of these Financial Statements.
89
Value and Indexed Property Income Trust PLC
• Annual Report and Financial Statements 2024
COMPANY STATEMENT OF CASHFLOWS
Year ended
31 March 2024
Year ended
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 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 on pages 92 to 121 form part of these Financial Statements.
90
Value and Indexed Property Income Trust PLC
• Annual Report and Financial Statements 2024
GROUP AND COMPANY STATEMENT OF CHANGES IN EQUITY
Year ended 31 March 2024
Note
Share
capital
£’000
Share
premium
£’000
Retained
earnings
£’000
Total
£’000
Group
Net assets at 31 March 2023
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
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
The Notes on pages 92 to 121 form part of these Financial Statements.
Year ended 31 March 2023 Restated
Note
Share
capital
£’000
Share
premium
£’000
Retained
earnings
£’000
Total
£’000
Group
Net assets at 31 March 2022
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
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
91
Value and Indexed Property Income Trust PLC
• Annual Report and Financial Statements 2024
NOTES TO THE FINANCIAL STATEMENTS
The Financial Statements have been prepared
in accordance with UK adopted international
accounting standards.
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
The Financial Statements have been prepared
on a going concern basis as disclosed on page
45 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 on pages
The Group’s business activities, together
with the factors likely to affect its future
development and performance, are set out
in the Strategic Report on pages 8 to 41. The
financial position of the Group as at 31 March
2024 is shown in the Statement of Financial
Position on page 84. The cash flows of the
Group for the year ended 31 March 2024 are
set out on page 88. The Group had fixed debt
totalling £49,073,000 as at 31 March 2024,
as set out in Note 12 on pages 104 and 105,
none of the borrowings is repayable before
March 2026. Note 21 on pages 108 to 114 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, as set out on page 34. 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
CONTINUED
NOTES TO THE FINANCIAL STATEMENTS
Value and Indexed Property Income Trust PLC
• Annual Report and Financial Statements 2024
92
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.
incorporated in Scotland
number SC467598. It is a wholly owned
subsidiary of the Company and has been
appointed to act as Alternative Investment
(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.
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
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
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
Payables are non-interest bearing and are
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.
1. Accounting policies
continued
Value and Indexed Property Income Trust PLC
• Annual Report and Financial Statements 2024
93
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
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
(k) 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
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
1. Accounting policies
continued
(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.
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
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.
1. Accounting policies
continued
NOTES TO THE FINANCIAL STATEMENTS
CONTINUED
(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
Year ended | Year ended 31 March | |||
31 March 2024 | 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 |
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 on page 49 of the Directors’
Report.
OLIM Property Limited received an investment management fee of £863,000 (2023 - £990,000),
Value and Indexed Property Income Trust PLC
• Annual Report and Financial Statements 2024
95
CONTINUED
NOTES TO THE FINANCIAL STATEMENTS
Value and Indexed Property Income Trust PLC
• Annual Report and Financial Statements 2024
96
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 on pages
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
Year ended 31 March 2024 | Year ended 31 March 2023 | |||||
Restated | ||||||
Revenue | Capital | Total | Revenue | Capital | Total | |
£’000 | £’000 | £’000 | £’000 | £’000 | £’000 | |
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) |
Value and Indexed Property Income Trust PLC
• Annual Report and Financial Statements 2024
97
CONTINUED
NOTES TO THE FINANCIAL STATEMENTS
Value and Indexed Property Income Trust PLC
• Annual Report and Financial Statements 2024
98
6. Taxation
continued
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 | 2,228 | 3,479 | ||||
tax non-current asset | ||||||
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
Year ended | Year ended 31 March | |||
31 March 2024 | 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) |
Value and Indexed Property Income Trust PLC
• Annual Report and Financial Statements 2024
99
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 2023 |
1,369 |
1,296 |
Second quarterly dividend of 3.20p per share |
||
(2023 - 3.10p) paid 26 January 2024 |
1,368 |
1,336 |
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 2024 |
31 March 2023 |
|
£’000 |
£’000 |
|
First quarterly dividend of 3.20p per share |
||
(2023 - 3.00p) paid 27 October 2023 |
1,369 |
1,296 |
Second quarterly dividend of 3.20p per share |
||
(2023 - 3.10p) paid 26 January 2024 |
1,368 |
1,336 |
Third quarterly dividend of 3.20p per share |
||
(2023 - 3.20p) payable 26 April 2024 |
1,365 |
1,376 |
Final quarterly dividend of 3.60p per share |
||
(2023 - 3.60p) payable 26 July 2024 |
1,529 |
1,549 |
5,631 |
5,557 |
The final dividend is based on the latest share capital of 42,476,147 ordinary shares excluding
CONTINUED
NOTES TO THE FINANCIAL STATEMENTS
Value and Indexed Property Income Trust PLC
• Annual Report and Financial Statements 2024
100
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 |
Investment |
|||
properties |
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.
Value and Indexed Property Income Trust PLC
• Annual Report and Financial Statements 2024
101
As at 31 March | As at 31 March | |
2024 | 2023 Restated | |
£’000 | £’000 | |
Savills plc valuation | 138,100 | 150,500 |
Operating lease assets | (5,911) | (6,298) |
Finance lease liabilities | 2,923 | 2,853 |
Valuation of Investment Properties | 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.
CONTINUED
NOTES TO THE FINANCIAL STATEMENTS
Value and Indexed Property Income Trust PLC
• Annual Report and Financial Statements 2024
102
Passing rent | Fair value | ||||
range | - Group | Key | |||
Property portfolio | £ | £’000 | unobservable input | Inputs range | Blended 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.
Country of | Date of | % | Principal | |
incorporation | incorporation | ownership | activity | |
Name | ||||
Value and Indexed Property | UK | 16 January 2014 | 100 | AIFM |
Income Services Limited , having its | ||||
registered office c/o Maven Capital Partners | ||||
UK LLP, Kintyre House, 205 West George | ||||
Street, Glasgow G2 2LW. |
Value and Indexed Property Income Trust PLC
• Annual Report and Financial Statements 2024
103
As at |
As at 31 March 2023 |
|||
31 March 2024 |
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
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
CONTINUED
NOTES TO THE FINANCIAL STATEMENTS
Value and Indexed Property Income Trust PLC
• Annual Report and Financial Statements 2024
104
As at |
As at |
|||
31 March 2024 |
31 March 2023 |
|||
Group |
Company |
Group |
Company |
|
£’000 |
£’000 |
£’000 |
£’000 |
|
Non-current liabilities |
||||
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.
Value and Indexed Property Income Trust PLC
• Annual Report and Financial Statements 2024
105
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 was recorded in the Statement of Financial Position as 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 value of the loans are disclosed in Note 21 on pages 113 and 114 and the Net Asset Value
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 on pages 97 and 98, 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
As at | As at | |
31 March 2024 | 31 March 2023 | |
£’000 | £’000 | |
Authorised: | ||
56,000,000 Ordinary Shares of 10p each (2023 - 56,000,000) | 5,600 | 5,600 |
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
CONTINUED
NOTES TO THE FINANCIAL STATEMENTS
Value and Indexed Property Income Trust PLC
• Annual Report and Financial Statements 2024
106
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 | |||
31 March 2024 | 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 2023 | ||||||
Year ended 31 March 2024 | 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 (see Note 14) | – | (670) | (670) | – | (1,307) | (1,307) |
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) | (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 | (5,300) | 73,399 | 68,099 | (3,555) | 85,686 | 82,131 |
Of the Company’s Retained Earnings of £68,099,000 (2023 restated - £82,131,000), £74,797,000
Value and Indexed Property Income Trust PLC
• Annual Report and Financial Statements 2024
107
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 | |||
31 March 2024 | 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 |
net cash inflow from operating activities
Year ended | Year ended 31 March | |||
31 March 2024 | 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 in other payables | 547 | 547 | 18 | 18 |
Net cash from operating activities | 7,534 | 7,534 | 7,494 | 7,494 |
CONTINUED
NOTES TO THE FINANCIAL STATEMENTS
Value and Indexed Property Income Trust PLC
• Annual Report and Financial Statements 2024
108
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 | (51,853) | (51,853) | (59,585) | (59,585) |
Closing debt at 31 March | (51,996) | (51,996) | (51,853) | (51,853) |
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 on page 49
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 set out on page 34 is achieved. The portfolio is reviewed on a periodic basis by
a senior investment manager and by OLIM Property’s Investment Committee.
Value and Indexed Property Income Trust PLC
• Annual Report and Financial Statements 2024
109
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.
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 on pages 104 and 105.
CONTINUED
NOTES TO THE FINANCIAL STATEMENTS
Value and Indexed Property Income Trust PLC
• Annual Report and Financial Statements 2024
110
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 | Weighted | Fixed | Floating | |
rate is fixed | average | rate | rate | |
Years | interest rate % | £’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 on
pages 104 and 105.
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.
Value and Indexed Property Income Trust PLC
• Annual Report and Financial Statements 2024
111
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
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.
Due between | |||||
Carrying | Expected | Due within | 3 months | Due after | |
value | cashflows | 3 months | and 1 year | 1 year | |
£’000 | £’000 | £’000 | £’000 | £’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 |
CONTINUED
NOTES TO THE FINANCIAL STATEMENTS
Value and Indexed Property Income Trust PLC
• Annual Report and Financial Statements 2024
112
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 | |||
31 March 2024 | 2023 Restated | |||
Statement | Statement | |||
of Financial | Maximum | of Financial | Maximum | |
Position | exposure | Position | exposure | |
£’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 on pages 25 and 27. The long term record of
performance through the varying property cycles since 1987 is set out on pages 124 and 125. 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 |
Value and Indexed Property Income Trust PLC
• Annual Report and Financial Statements 2024
113
This amount comprises the total contracted rent receivable as at 31 March 2024.
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.
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.
CONTINUED
NOTES TO THE FINANCIAL STATEMENTS
Value and Indexed Property Income Trust PLC
• Annual Report and Financial Statements 2024
114
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 on pages 104 and 105.
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
(iii) Financial instruments by category
Financial assets
Fair value through | ||||
profit or loss | Amortised cost | |||
2023 | ||||
2024 | 2023 | 2024 | Restated | |
£’000 | £’000 | £’000 | £’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 or loss | Amortised cost | |||
2024 | 2023 | 2024 | 2023 | |
£’000 | £’000 | £’000 | Restated | |
£’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) |
Value and Indexed Property Income Trust PLC
• Annual Report and Financial Statements 2024
115
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 on pages 104 and
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
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.
CONTINUED
NOTES TO THE FINANCIAL STATEMENTS
Value and Indexed Property Income Trust PLC
• Annual Report and Financial Statements 2024
116
continued
24. Correction of errors
(i) Statement of financial position
Group | Company | |||||
Impact of correction of error | Impact of correction of error | |||||
As | As | |||||
previously | As | previously | As | |||
reported | Adjustments | restated | reported | Adjustments | restated | |
As at 31 March 2022 | £’000 | £’000 | £’000 | £’000 | £’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 |
Value and Indexed Property Income Trust PLC
• Annual Report and Financial Statements 2024
117
continued
24. Correction of errors
Group | Company | |||||
Impact of correction of error | Impact of correction of error | |||||
As | As | |||||
previously | As | previously | As | |||
reported | Adjustments | restated | reported | Adjustments | restated | |
As at 31 March 2023 | £’000 | £’000 | £’000 | £’000 | £’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 |
CONTINUED
NOTES TO THE FINANCIAL STATEMENTS
Value and Indexed Property Income Trust PLC
• Annual Report and Financial Statements 2024
118
continued
24. Correction of errors
(ii) Statement of comprehensive income
Group | Group | |||||
Impact of correction of error | Impact of correction of error | |||||
As previously reported | Adjustments | |||||
For the year ended | Revenue | Capital | Total | Revenue | Capital | Total |
31 March 2023 | £’000 | £’000 | £’000 | £’000 | £’000 | £’000 |
Income | ||||||
Rental income | 8,358 | – | 8,358 | (132) | – | (132) |
Investment income | 168 | – | 168 | – | – | – |
Other income | 314 | – | 314 | – | – | – |
8,840 | – | 8,840 | (132) | – | (132) | |
Gains and losses | ||||||
on investments | ||||||
Realised gains on | ||||||
held-at-fair-value investments | ||||||
and investment properties | – | 1,446 | 1,446 | – | – | – |
Unrealised (losses)/ gains on | ||||||
held-at-fair-value investments | ||||||
and investment properties | – | (24,695) | (24,695) | – | 132 | 132 |
Total income | 8,840 | (23,249) | (14,409) | (132) | 132 | – |
Expenses | ||||||
Investment management fees | (990) | – | (990) | – | – | – |
Other operating expenses | (895) | – | (895) | – | – | – |
Finance costs | (1,779) | (6,269) | (8,048) | – | – | – |
Total expenses | (3,664) | (6,269) | (9,933) | – | – | – |
Profit/(Loss) before taxation | 5,176 | (29,518) | (24,342) | (132) | 132 | – |
Taxation | (979) | 1,425 | 446 | 444 | – | 444 |
Profit/(Loss) attributable to equity | ||||||
shareholders of parent company | 4,197 | (28,093) | (23,896) | 312 | 132 | 444 |
Earnings per | ||||||
Ordinary Share (pence) | 9.70 | (64.92) | (55.22) | 0.72 | 0.30 | 1.02 |
Value and Indexed Property Income Trust PLC
• Annual Report and Financial Statements 2024
119
continued
24. Correction of errors
Group | |||
Impact of correction of error | |||
As restated | |||
For the year ended | Revenue | Capital | Total |
31 March 2023 | £’000 | £’000 | £’000 |
Income | |||
Rental income | 8,226 | – | 8,226 |
Investment income | 168 | – | 168 |
Other income | 314 | – | 314 |
8,708 | – | 8,708 | |
Gains and losses | |||
on investments | |||
Realised gains on | |||
held-at-fair-value investments | |||
and investment properties | – | 1,446 | 1,446 |
Unrealised (losses)/ gains on | |||
held-at-fair-value investments | |||
and investment properties | – | (24,563) | (24,563) |
Total income | 8,708 | (23,117) | (14,409) |
Expenses | |||
Investment management fees | (990) | – | (990) |
Other operating expenses | (895) | – | (895) |
Finance costs | (1,779) | (6,269) | (8,048) |
Total expenses | (3,664) | (6,269) | (9,933) |
Profit/(Loss) before taxation | 5,044 | (29,386) | (24,342) |
Taxation | (535) | 1,425 | 890 |
Profit/(Loss) attributable to equity | |||
shareholders of parent company | 4,509 | (27,961) | (23,452) |
Earnings per | |||
Ordinary Share (pence) | 10.42 | (64.62) | (54.20) |
CONTINUED
NOTES TO THE FINANCIAL STATEMENTS
Value and Indexed Property Income Trust PLC
• Annual Report and Financial Statements 2024
120
continued
24. Correction of errors
Company | Company | |||||
Impact of correction of error | Impact of correction of error | |||||
As previously reported | Adjustments | |||||
For the year ended | Revenue | Capital | Total | Revenue | Capital | Total |
31 March 2023 | £’000 | £’000 | £’000 | £’000 | £’000 | £’000 |
Income | ||||||
Rental income | 8,358 | – | 8,358 | (132) | – | (132) |
Investment income | 168 | – | 168 | – | – | – |
Other income | 314 | – | 314 | – | – | – |
8,840 | – | 8,840 | (132) | – | (132) | |
Gains and losses | ||||||
on investments | ||||||
Realised gains on | ||||||
held-at-fair-value investments | ||||||
and investment properties | – | 1,446 | 1,446 | – | – | – |
Unrealised (losses)/ gains on | ||||||
held-at-fair-value investments | ||||||
and investment properties | – | (24,695) | (24,695) | – | 132 | 132 |
Total income | 8,840 | (23,249) | (14,409) | (132) | 132 | – |
Expenses | ||||||
Investment management fees | (990) | – | (990) | – | – | – |
Other operating expenses | (895) | – | (895) | – | – | – |
Finance costs | (1,779) | (6,269) | (8,048) | – | – | – |
Total expenses | (3,664) | (6,269) | (9,933) | – | – | – |
Profit/(Loss) before taxation | 5,176 | (29,518) | (24,342) | (132) | 132 | – |
Taxation | (979) | 1,425 | 446 | 444 | – | 444 |
Profit/(Loss) attributable to equity | ||||||
shareholders of parent company | 4,197 | (28,093) | (23,896) | 312 | 132 | 444 |
Earnings per | ||||||
Ordinary Share (pence) | 9.70 | (64.92) | (55.22) | 0.72 | 0.30 | 1.02 |
Value and Indexed Property Income Trust PLC
• Annual Report and Financial Statements 2024
121
continued
24. Correction of errors
Company | |||
Impact of correction of error | |||
As restated | |||
For the year ended | Revenue | Capital | Total |
31 March 2023 | £’000 | £’000 | £’000 |
Income | |||
Rental income | 8,226 | – | 8,226 |
Investment income | 168 | – | 168 |
Other income | 314 | – | 314 |
8,708 | – | 8,708 | |
Gains and losses | |||
on investments | |||
Realised gains on | |||
held-at-fair-value investments | |||
and investment properties | – | 1,446 | 1,446 |
Unrealised (losses)/ gains on | |||
held-at-fair-value investments | |||
and investment properties | – | (24,563) | (24,563) |
Total income | 8,708 | (23,117) | (14,409) |
Expenses | |||
Investment management fees | (990) | – | (990) |
Other operating expenses | (895) | – | (895) |
Finance costs | (1,779) | (6,269) | (8,048) |
Total expenses | (3,664) | (6,269) | (9,933) |
Profit/(Loss) before taxation | 5,044 | (29,386) | (24,342) |
Taxation | (535) | 1,425 | 890 |
Profit/(Loss) attributable to equity | |||
shareholders of parent company | 4,509 | (27,961) | (23,452) |
Earnings per | |||
Ordinary Share (pence) | 10.42 | (64.62) | (54.20) |
122
Canterbury
Additional
Information
123
124
Value and Indexed Property Income Trust PLC
• Annual Report and Financial Statements 2023
PROPERTY RECORD OVER 37 YEARS
Total return
31 March
Rental income
£’000
Capital value
£’000
Running yield
%
VIP
%
MSCI UK
Quarterly
Property Index* %
2024
9,665
138,100
7.0
-1.8
-1.1
2023
9,338
150,500
6.2
-7.8
-13.0
2022
8,334
155,478
5.4
20.2
19.6
2021
5,152
80,550
6.4
2
1
2020
4,482
70,200
6.4
6
-1
2019
4,372
68,800
6.4
8
5
2018
4,329
68,700
6.3
11
10
2017
4,480
66,775
6.7
13
5
2016
3,940
55,125
7.2
10
11
2015
4,019
54,500
7.4
13
17
2014
3,552
46,475
7.6
11
14
2013
3,543
46,225
7.7
4
3
2012
3,537
48,250
7.3
7
6
2011
3,552
49,075
7.2
9
11
2010
3,463
48,750
7.1
18
17
2009
3,278
44,850
7.3
-11
-25
2008
3,261
51,000
6.4
0
-9
2007
3,116
54,525
5.7
15
16
2006
3,219
52,250
6.2
21
21
2005
3,124
45,875
6.8
21
17
2004
3,052
40,375
7.5
15
12
2003
3,089
40,550
7.6
12
9
2002
3,013
38,800
7.8
13
7
2001
3,117
39,825
7.8
10
11*
2000
3,054
39,800
7.7
15
15*
1999
3,410
41,055
8.3
25
12*
125
Value and Indexed Property Income Trust PLC
• Annual Report and Financial Statements 2023
Total return
31 March
Rental income
£’000
Capital value
£’000
Running yield
%
VIP
%
MSCI UK
Quarterly
Property Index* %
1998
3,141
34,800
9.0
15
18*
1997
3,111
32,805
9.5
10
11*
1996
2,840
29,440
9.6
9
5*
1995
2,948
31,125
9.5
10
13*
1994
2,806
29,835
9.4
23
19*
1993
2,773
26,415
10.5
12
-3*
1992
2,709
25,880
10.5
10
-5*
1991
2,331
23,800
9.8
2
-9*
1990
2,050
24,390
8.4
15
15*
1989
1,915
23,475
8.2
30
29*
1988
1,329
14,939
8.9
24
27*
1987
1,155
11,375
10.2
N/A
N/A
*MSCI (ex IPD) UK Quarterly Property Index 12 months total returns to 31 March; except 1988 – 2000: IPD Annual Index
126
Value and Indexed Property Income Trust PLC
• Annual Report and Financial Statements 2023
LIST OF PROPERTIES
Industrial / Warehouse
Address
Tenants
Aberdeen – Moss Road, Gateway Business Park
H.M. Government*
Aylesford – Broadmead House, Bellingham Way, New Hythe
Kier Group*
Chester – Winsford Way, Sealand Industrial Estate
MKM Building Supplies*
Dundee – Faraday Street, Dryburgh Industrial Estate
Screwfix***
Fareham – Mitchell Close, Segensworth East
Hampshire County Council
Gloucester – Falcon Close,
Green Farm Business Park, Quedgeley
H.M. Government*
Milton Keynes – Wimblington Drive
Winterbotham Darby*
Staines – Laleham Road
Halfords**
Stoke-on-Trent – Stanley Matthews Way
MKM Building Supplies*
Thetford – Units 1 - 4, Baird Way
Brake Brothers*
Thirsk – Dalton Airfield Industrial Estate
H.M. Government*
Thurrock – 680 London Road
Halfords**
Westbury – 50 Cory Way, West Wilts Trading Estate
Arla Foods*
Supermarkets
Address
Tenants
Aberfoyle – Main Street
Co-operative Group Food**
Bebington – 152 Kings Road
Sainsbury’s*
Blandford Forum – Langton Road
Marks and Spencer*
Garstang – Park Hill Road
Sainsbury’s*
Invergordon – 110 High Street
Co-operative Group Food**
Kirriemuir – 33 The Roods
Co-operative Group Food*
Newport, Isle of Wight – Litten Park, Church Litten
Marks and Spencer***
Rayleigh – 12 - 24 Eastwood Road
Marks and Spencer*
York – 103 - 104 Hull Road
Co-operative Group Food***
127
Value and Indexed Property Income Trust PLC
• Annual Report and Financial Statements 2023
Pubs
Address
Tenants
Canterbury – The Bishop’s Finger, 13 St. Dunstan Street
Shepherd Neame*
London – The Bishop's Finger, West Smithfield
Shepherd Neame*
London – The Prince of Wales, 48 Cleaver Square
Shepherd Neame*
Hotels
Address
Tenants
Alnwick – Willowburn Avenue, South Road
Premier Inn**
Catterick - Princes Gate, Richmond Road
Premier Inn**
* RPI-linked rent increases
** CPI-linked rent increases
*** Fixed rent increases
Bowling and Health Club
Address
Tenants
Ashford – 43-79 Station Road
Hollywood Bowl Group*
Brentwood – Little Warley Hall Lane
Virgin Active Health Club*
Coventry – Crosspoint, Olivier Way
Ten Entertainment Group*
Starbucks*
Pizza Hut***
Doncaster – The Leisure Park, Bawtry Road
Ten Entertainment Group*
Peterborough – Sturrock Way
Hollywood Bowl Group*
Stafford – TenPin, Greyfriars Place
Ten Entertainment Group*
Other
Address
Tenants
Dover – St. Margaret's Holiday Park, Reach Road
Park Resorts*
Risca – 75-77 Tredegar Street
Caerphilly Borough Council*** Tesco*
128
Value and Indexed Property Income Trust PLC
• Annual Report and Financial Statements 2023
Value and Indexed Property Income Trust PLC
(the Company) is an alternative investment
fund (AIF) for the purposes of the Alternative
Investment Fund Managers Directive (AIFMD).
The Company has appointed its wholly owned
subsidiary, Value and Indexed Property Income
Services Limited (VIS), to act as its alternative
authorised and regulated by the FCA.
As the AIFM, VIS has responsibility for the
portfolio management and risk management
of the assets of the Company. VIS has delegated
its portfolio management responsibilities
for the property portfolio to OLIM Property
(the Investment Manager). The delegation by
VIS of its management responsibilities is in
accordance with the delegation requirements
of the AIFMD. The Investment Manager
remains subject to the supervision and
direction of VIS and the Board.
An additional requirement of the AIFMD is to
appoint a depositary on behalf of the Company
to oversee the custody and cash arrangements
of the Company. The Company has appointed
BNP Paribas Securities Services S.A. to act as
the Company’s Depositary.
Disclosures
The Company and VIS are required to make
certain disclosures available to investors
in accordance with the AIFMD. Those
disclosures which require to be made prior
to investment are contained in an investor
disclosure document, which can be found
on the Company’s web pages hosted by the
Investment Manager at www.olimproperty.
co.uk/value-and-indexed-property-income-
trust.html.
The Investor Disclosure Document was last
updated to reflect the change of Auditor in
November 2023.
ALTERNATIVE INVESTMENT FUND MANAGERS DIRECTIVE
The Company and VIS also make the following
periodic disclosures to investors in accordance
with the requirements in the AIFMD:
•
Investment Management
: Details of the
investment objective, strategy and policy of
the Company are included in the Strategic
Report. A list of the investment properties
is included on pages 126 and 127.
•
Valuation of illiquid assets
: None of the
Company’s assets is subject to special
arrangements arising from their illiquid
nature.
•
Liquidity management
: There are no new
arrangements for managing the liquidity
of the Company or any material changes
to the liquidity management systems and
procedures employed by the Company.
•
Risk Management
: There is an ongoing
process for identifying, evaluating and
managing the principal and emerging risks
faced by the Company. Further details of the
risk profile and risk management systems
of the Company are set out in the Strategic
Report and in Note 21 to the Financial
Statements. There have been no changes to
the risk management systems in place in
the period under review and no breaches
of any of the risk limits set, with no breach
expected.
•
AIFM Remuneration
: All authorised
AIFMs are required to comply with the
AIFMD Remuneration Code. The expenses
which VIS incurs in the provision of
AIFM services are met by the Company.
During the year ended 31 March 2024, all
of the directors of VIS were the same as
the Directors of the Company, with the
exception of Matthew Oakeshott who is not
a director of VIS, and no additional staff
were employed by VIS. The Directors of the
Company do not receive a separate fee in
respect of being directors of VIS and details
of the remuneration of the Directors is set
out in the Directors’ Remuneration Report
on pages 54 to 57. The Investment Manager
receives remuneration separately (as set
out on page 49). The Investment Manager
is bound by regulatory requirements on
remuneration that are equally as effective
as those applicable to VIS under the AIFMD
Remuneration Code.
129
Value and Indexed Property Income Trust PLC
• Annual Report and Financial Statements 2023
Leverage
Circumstances when the Company
may use leverage
Leverage may be used where it is
believed that the assets funded by
borrowed monies will generate a return
in excess of the cost of borrowing.
In a rising market, gearing will tend to enhance
returns because of the increased exposure to
the markets but it will tend to increase losses
in the event of a falling market. Leverage is,
therefore, constantly monitored.
Types and sources of leverage permitted
The Company has a long-standing 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.
The Company’s current borrowings comprise
a £15 million secured term loan at a ten year
interest rate of 4.19% including all costs,
which expires on 31 March 2026, and a
£35 million secured term loan, at a rate of
3.65% on £33.25 million and the balance
of £1.75 million on a floating rate (SONIA)
plus a margin of 2.2%, which expires on 31
March 2033. Further details can be found
in Note 12 to the Financial Statements on
pages 104 and 105 of this Annual Report.
The maximum level of leverage which
the AIFM is entitled to employ on behalf
of the Company
Under the AIFMD, the Company is required
to calculate leverage under the two
methodologies specified by the AIFMD, the
‘Gross Method’ and the ‘Commitment Method’,
the difference being that the Commitment
Method allows some netting and hedging
arrangements to reduce exposures.
VIS has set a maximum leverage limit of 200%
under both the Gross Method and Commitment
Method. As noted above, these leverage limits
are subject to a long-standing policy not to
raise new borrowings if total net borrowings
would represent more than half of total assets.
The table below sets out the current maximum
permitted range and the actual level of leverage
for the Company, as a percentage of adjusted
Shareholders’ funds:
Gross
method (%)
Commitment
method (%)
Limit
200
200
Actual level at
31 March 2024
152
152
There have been no changes to the maximum
level of leverage that the Group has employed
and no changes to the right of reuse of
collateral or any guarantee granted under the
leveraging arrangements.
The Company’s leveraging arrangements are
collateralised through the granting of charges
over the properties in the property portfolio
to the respective providers of the two secured
term loans.
130
Value and Indexed Property Income Trust PLC
• Annual Report and Financial Statements 2023
Direct
Investors can buy and sell shares in Value
and Indexed Property Income Trust
PLC directly through a stockbroker or
indirectly through a lawyer, accountant
or other professional adviser.
Keeping you informed
The latest Ordinary Share price is displayed on
the London Stock Exchange website, subject to
a delay of 15 minutes. “VIP” is the Code for the
Ordinary Shares which may be found at www.
londonstockexchange.com. Additional data on
the Company and other investment trusts may
be found at www.trustnet.co.uk.
Customer services
For enquiries in relation to Ordinary Shares
held in certificated form, please contact the
Company’s registrars:
Computershare Investor Services PLC
The Pavilions
Bridgwater Road
Bristol, BS99 6ZZ
Telephone: 0370 703 0168
www.investorcentre.co.uk/contactus
HOW TO INVEST IN VALUE AND INDEXED PROPERTY INCOME TRUST PLC
Note
Please remember that past performance is
not a guide to the future. Stock market and
currency movements may cause the value of
shares and the income from them to fall as
well as rise and investors may not get back the
amount they originally invested.
As with all equity investments, the value of
investment trusts purchased will immediately
be reduced by the difference between the
buying and selling prices of the shares, the
market maker’s spread.
Investors should further bear in mind that
the value of any tax relief will depend on the
individual circumstances of the investor and
that tax rates and reliefs, may be changed by
future legislation.
131
Value and Indexed Property Income Trust PLC
• Annual Report and Financial Statements 2023
GLOSSARY
Alternative
performance measures
Alternative performance measures (APMs) are
numerical measures of the Group’s current,
historical or future performance, financial
position or cash flows, other than the financial
measures defined or specified in the applicable
financial framework. The Group’s applicable
financial framework includes IFRS and the
AIC SORP. The Directors assess the Group’s
performance against a range of criteria which
are viewed as particularly relevant for closed-
end investment companies.
Total return
Total return is considered to be an APM. The
NAV total return is calculated by reinvesting
the dividends in the assets of the Group from
the relevant ex-dividend date. Dividends are
deemed to be reinvested on the ex-dividend
date as this is the protocol used by the Group’s
benchmark and other indices. The Share Price
total return is calculated by reinvesting the
dividends in the shares of the Group from the
relevant ex-dividend date.
Net asset value valuing
debt at carrying value
Net asset value valuing debt at carrying
value is the net value of the Group’s
assets, cash and other current assets
less all creditors, provisions and all debt,
all valued at carrying value. Net income
from the financial year is included. The
calculation of this APM is explained in
Note 17 to the Financial Statements.
Discount
The discount is the amount by which the
market price of a share of an investment trust
is lower than the NAV per share expressed as a
percentage of the NAV per share.
31 March
2024
31 March
2023 Restated
Share price
171.3p
204.5p
NAV (debt
at carrying value)
213.5p
244.4p
Discount
19.8%
16.3%
132
Value and Indexed Property Income Trust PLC
• Annual Report and Financial Statements 2023
NOTICE OF ANNUAL GENERAL MEETING
Notice is hereby given that the Annual
General Meeting of Value and Indexed
Property Income Trust PLC (the “Company”)
will be held at the offices of Shepherd &
Wedderburn LLP, 9 Haymarket Square,
Edinburgh EH3 8FY on Thursday, 11 July 2024
at 12.30pm, for the following purposes:
To consider and if thought fit, pass the
following Resolutions, of which Resolutions
1 to 11 inclusive will be proposed as Ordinary
Resolutions and Resolutions 12 to 14 inclusive
will be proposed as Special Resolutions:
1.
To receive the Directors’ Report and audited
Financial Statements, together with the
Auditor’s Report thereon for the year ended
31 March 2024.
2.
To approve the Directors’ Remuneration
Report for the year ended 31 March 2024.
3.
To approve a final dividend of 3.6p per
Ordinary Share in respect of the year ended
31 March 2024.
4.
To re-elect John Kay as a Director of the
Company.
5.
To re-elect Matthew Oakeshott as a Director
of the Company.
6.
To re-elect David Smith as a Director of the
Company.
7.
To re-elect Josephine Valentine as a
Director of the Company.
8.
To re-elect Lucy Winterburn as a Director of
the Company.
9.
To appoint RSM UK Audit LLP as
Independent Auditor of the Company to
hold office until the conclusion of the next
Annual General Meeting at which accounts
are laid before the Company.
10.
To authorise the Directors to fix the
remuneration of the Independent Auditor
for the year to 31 March 2025.
11. Authority to Allot Shares
That, in substitution for any existing
authority, but without prejudice to the
exercise of any such authority prior
to the date hereof, the Directors of the
Company be and are hereby generally and
unconditionally authorised pursuant to
and in accordance with Section 551 of the
Companies Act 2006 (the “Act”) to exercise
all the powers of the Company to allot
shares in the Company and to grant rights
to subscribe for or to convert any security
into shares in the Company (“Securities”)
provided that such authority shall be
limited to the allotment of shares and the
grant of rights in respect of shares with an
aggregate nominal value of up to £424,761
(being approximately 10% of the nominal
value of the issued share capital (excluding
Treasury shares) of the Company, as at
the date of this Notice) provided that such
authorisation expires (unless previously
extended or renewed, varied or revoked
by the Company in general meeting) at
the conclusion of the next Annual General
Meeting of the Company in 2025 or on the
expiry of 15 months from the passing of
this Resolution, (whichever is earlier) save
that the Company may, at any time prior to
the expiry of this authority, make offers or
agreements which would or might require
such Securities to be allotted or granted
after such expiry and the Directors may
make such offers or agreements as if such
expiry had not occurred.
12. Disapplication of Pre-emption Rights
That, subject to the passing of Resolution
11 set out above, and in substitution for any
existing power but without prejudice to
the exercise of any such power prior to the
date hereof, the Directors of the Company
be and are hereby generally empowered,
pursuant to Sections 570 and 573 of the
Companies Act 2006 (“the Act”), to allot
equity securities (as defined in Section
560 of the Act) for cash pursuant to the
authority conferred on them by Resolution
11 or by way of a sale of Treasury shares
(within the meaning of section 560(3) of the
Act) as if Section 561(1) of the Act did not
apply to any such allotment provided that
this power shall be limited to the allotment
of equity securities:
(i) (otherwise than pursuant to sub-
paragraph (ii) below) up to an aggregate
nominal value of £424,761 (being 10% of
the nominal value of the issued share
capital as at the date of this Notice); and
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• Annual Report and Financial Statements 2023
(ii) in connection with an offer of such
equity securities by way of rights issue,
open offer or other pre-emptive offer in
favour of all holders of Ordinary Shares
where the equity securities respectively
attributable to the interests of all such
holders are either proportionate (as nearly
as may be) to the respective number of
Ordinary Shares held by them on a record
date fixed by the Directors (subject to such
exclusions, limitations, restrictions or other
arrangements as the Directors consider
necessary or appropriate to deal with
Treasury shares, fractional entitlements,
record dates, legal, regulatory or practical
problems in or under the laws of, or
requirements of, any regulatory body or any
stock exchange in any territory or otherwise
howsoever); and shall expire (unless
previously renewed, varied or revoked by
the Company in general meeting) at the
conclusion of the Annual General Meeting
of the Company in 2025, or on the expiry
of 15 months from the passing of this
Resolution (whichever is earlier), save that
the Company may, at any time prior to the
expiry of such authority, make offers or
agreements before such expiry which would
or might require equity securities to be
allotted after such expiry and the Directors
may make such offers or agreements as if
such expiry had not occurred.
13. Authority to Make Market
Purchases of Shares.
That, the Directors be and are hereby
generally and unconditionally authorised,
for the purposes of Section 701 of the
Companies Act 2006 (the “Act”), to make
one or more market purchases (within
the meaning of Section 693(4) of the Act)
of fully paid Ordinary Shares of 10p each
in the capital of the Company (“Ordinary
Shares”) on such terms as the Directors of
the Company think fit, either for retention
as Treasury shares for future reissue, resale,
transfer or cancellation, provided that:
(i) the maximum aggregate number of
Ordinary Shares hereby authorised to be
purchased shall be 6,367,174 Ordinary
Shares, representing 14.99% of the issued
ordinary share capital of the Company as at
the date this Notice;
(ii) the minimum price which may be
paid for an Ordinary Share shall be 10p
(exclusive of expenses);
(iii) the maximum price (exclusive of
expenses) which may be paid for an
Ordinary Share shall be the higher of:
(a) 105% of the average of the middle
market quotations of the Ordinary Shares
(as derived from the Daily Official List of
the London Stock Exchange) for the five
business days immediately preceding the
date of purchase; and
(b) the higher of the price of the last
independent trade in Ordinary Shares
and the highest current independent bid
for Ordinary Shares on the London Stock
Exchange; and
(iv) unless previously varied, revoked or
renewed, the authority hereby conferred
shall expire at the conclusion of the Annual
General Meeting of the Company to be held
in 2025 or on the expiry of 15 months from
the passing of this Resolution (whichever
is the earlier) save that the Company may
at any time prior to such expiry, enter into
a contract or arrangement to purchase
Ordinary Shares under this authority which
will or might be completed or executed
wholly or partly after the expiration of
this authority and may make a purchase
of shares pursuant to any such contract or
arrangement; and
(v) any Ordinary Shares so purchased
shall be cancelled or, if the Directors so
determine and subject to the provisions of
the Act and any applicable regulations of
the Financial Conduct Authority, be held
or otherwise dealt with as permitted by the
Companies Act 2006 as Treasury Shares.
14. Notice of General Meeting
That, a general meeting other than an
Annual General Meeting may be called on
not less than 14 clear days’ notice.
By order of the Board
Maven Capital Partners UK LLP
Company Secretary
First Floor Kintyre House
205 West George Street
Glasgow G2 2LW
11 June 2024
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• Annual Report and Financial Statements 2023
NOTICE OF ANNUAL GENERAL MEETING
CONTINUED
Notes:
(i) A member entitled to vote at the meeting
may appoint a proxy or proxies to exercise
all or any of his/her rights to attend, speak
and vote on his/her behalf at the meeting. A
proxy need not be a member of the Company.
A member may appoint more than one
proxy provided each proxy is appointed to
exercise rights attached to different shares.
A member may not appoint more than one
proxy to exercise the rights attached to any
one share. If you wish your proxy to speak
on your behalf at the meeting you will need
to appoint your own choice of proxy (not
the Chairman of the meeting) and give your
instructions directly to them. A proxy form
which may be used to make such appointment
and give proxy instructions accompanies
this notice. If you do not have a proxy form
and believe that you should have one, or if
you require additional forms or would like to
appoint more than one proxy, please contact
the Company’s Registrars, Computershare
Investor Services PLC on 0370 703 0168. In
the case of joint holders, where more than
one of the joint holders purports to appoint
a proxy, only the appointment submitted
by the most senior holder will be accepted.
Seniority is determined by the order in which
the names of the joint holders appear in the
Company’s Register of Members in respect of
the joint holding (the first-named being the
most senior). A member present in person
or by proxy shall have one vote on a show of
hands and on a poll every member present in
person or by proxy shall have one vote for every
Ordinary Share of which he/she is the holder.
(ii) A personalised form of proxy, and reply-
paid envelope, is enclosed for Ordinary
Shareholders. To be valid, any proxy form
or other instrument of proxy and any power
of attorney or other authority, if any, under
which they are signed or a notarially certified
copy of that power of attorney or authority
should be sent to the Company’s Registrars,
Computershare Investor Services PLC, The
Pavilions, Bridgwater Road, Bristol, BS99 6ZY
so as to arrive not less than forty eight hours
(excluding non-working days) before the time
fixed for the meeting.
(iii) The return of a completed proxy form or
other such instrument of proxy will not prevent
a member attending the Annual General
Meeting and voting in person if he/ she wishes
to do so.
(iv) CREST members who wish to appoint
a proxy or proxies through the CREST
electronic proxy appointment service may do
so for the meeting and any adjournment(s)
thereof by using the procedures described in
the CREST Manual and by logging on to the
website www.euroclear.com/CREST. CREST
personal members or other CREST sponsored
members, and those CREST members who
have appointed a voting service provider(s),
should refer to their CREST sponsor or voting
service provider(s), who will be able to take the
appropriate action on their behalf.
(v) In order for a proxy appointment or
instruction made using the CREST service to
be valid, the appropriate CREST message (a
“CREST Proxy Instruction”) must be properly
authenticated in accordance with Euroclear
UK & Ireland Limited’s specifications,
and must contain the information required for
such instruction, as described in the CREST
Manual. The message, regardless of whether
it constitutes the appointment of a proxy or
is an amendment to the instruction given to a
previously appointed proxy must, in order to be
valid, be transmitted so as to be received by the
Company’s Registrar (ID 3RA50) no later than
48 hours (excluding non-working days) before
the time of the meeting or any adjournment.
For this purpose, the time of receipt will be
taken to be the time (as determined by the
timestamp applied to the message by the
CREST Application Host) from which the
Company’s Registrar is able to retrieve the
message by enquiry to CREST in the manner
prescribed by CREST. After this time any
change of instructions to proxies appointed
through CREST should be communicated to the
appointee through other means.
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Value and Indexed Property Income Trust PLC
• Annual Report and Financial Statements 2023
(vi) CREST members and, where applicable,
their CREST sponsors, or voting service
providers should note that Euroclear UK
& Ireland Limited does not make available
special procedures in CREST for any particular
message. Normal system timings and
limitations will, therefore, apply in relation to
the input of CREST Proxy Instructions. It is the
responsibility of the CREST member concerned
to take (or, if the CREST member is a CREST
personal member, or sponsored member, or
has appointed a voting service provider(s),
to procure that his CREST sponsor or voting
service provider(s) take(s)) such action as
shall be necessary to ensure that a message is
transmitted by means of the CREST system
by any particular time. In this connection,
CREST members and, where applicable, their
CREST sponsors or voting system providers
are referred, in particular, to those sections
of the CREST Manual concerning practical
limitations of the CREST system and timings.
(vii) The Company may treat as invalid a CREST
Proxy Instruction in the circumstances set out
in Regulation 35(5) (a) of the Uncertificated
Securities Regulations 2001.
(viii) The “vote withheld” option on the proxy
form is provided to enable a member to abstain
on any particular resolution. It should be
noted that an abstention is not a vote in law
and will not be counted in the calculation of
the proportion of votes “for” or “against” a
particular resolution.
(ix) The right to vote at a meeting is determined
by reference to the Company’s register of
members as at close of business on 9 July
2024 or if this meeting is adjourned, by
close of business on the day two days
(excluding non-working days) prior to the
adjourned meeting. Changes to entries
on that register after that time shall be
disregarded in determining the rights of any
member to attend and vote at the meeting.
(x) As at 10 June 2024 (being the latest
practicable date prior to the publication of
this document) the Company’s issued share
capital comprised 42,476,147 Ordinary Shares
of 10p each in issue and 3,073,828 Ordinary
Shares held in Treasury. Each Ordinary
Share in issue carries the right to one vote
at a general meeting of the Company and,
therefore, the total number of voting rights in
the Company as at 10 June 2024 was 42,476,147.
Following Resolution 13 becoming effective, the
maximum aggregate number of shares hereby
authorised to be purchased shall be 6,367,174
Ordinary Shares in issue immediately prior to
the passing of Resolution 13.
(xi) Any person holding 3% or more of the total
voting rights of the Company who appoints a
person other than the Chairman of the meeting
as his proxy will need to ensure that both he
and his proxy complies with their respective
disclosure obligations under the UK Disclosure,
Guidance and Transparency Rules.
(xii) A person to whom this Notice is sent
who is a person nominated under Section
146 of the Companies Act 2006 to enjoy
information rights (a “Nominated Person”)
may, under an agreement between him/her
and the shareholder by whom he/she was
nominated, have a right to be appointed (or
to have someone else appointed) as a proxy
for the meeting. If a Nominated Person has
no such proxy appointment right or does not
wish to exercise it, he/she may, under any such
agreement, have a right to give instructions
to the shareholder as to the exercise of
voting rights. The statements of the rights of
members in relation to the appointment of
proxies in notes (i) to (iii) above do not apply to
a Nominated Person. The rights described in
those notes can only be exercised by registered
members of the Company.
(xiii) Biographical details of the Directors
standing for re-election are set out on page 44
of this Annual Report.
(xiv) Members who have general queries about
the Annual General Meeting should contact the
Company Secretary in writing. Members are
advised that any telephone number, website
or email address which may be set out in this
Notice of Annual General Meeting or in any
related documents (including the proxy form)
is not to be used for the purposes of serving
information or documents on, or otherwise
communicating with, the Company for any
purposes other than those expressly stated.
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Value and Indexed Property Income Trust PLC
• Annual Report and Financial Statements 2023
NOTICE OF ANNUAL GENERAL MEETING
CONTINUED
(xv) Members should note that, it is possible
that, pursuant to requests made by members
of the Company under Section 527 of the
Companies Act 2006, the Company may be
required to publish on a website a statement
setting out any matter relating to the audit
of the Company’s accounts (including the
auditors’ report and the conduct of the audit)
that are to be laid before the meeting or any
circumstances connected with an auditor of
the Company ceasing to hold office since the
previous meeting at which annual accounts
and reports were laid in accordance with
section 437 of the Companies Act 2006. The
Company may not require the members
requesting any such website publication to pay
its expenses in complying with sections 527
or 528 of the Companies Act 2006. Where the
Company is required to place a statement on
a website under section 527 of the Companies
Act 2006, it must forward the statement to
the Company’s auditors no later than the
time when it makes the statement available
on the website. The business which may
be dealt with at the meeting includes any
statement that the Company has been required
under section 527 of the Companies Act
2006 to publish on a website.
(xvi) No Director has a service contract with
the Company. Copies of the Directors’ letters
of appointment are available for inspection on
any day (except Saturdays, Sundays and bank
holidays) from the date of this Notice until
the date of the meeting during usual business
hours at the Company’s registered office and
for 15 minutes prior to, and at, the meeting.
(xvii) Information regarding the
Annual General Meeting is available
from the Company’s web pages, hosted
by the Investment Manager, at www.
olimproperty.co.uk/value-and-indexed-
property-income-trust.html
(xviii) Pursuant to Section 319A of the
Companies Act 2006, as a member,
you have the right to put questions
at the meeting relating to business
being dealt with at the meeting.
137
Value and Indexed Property Income Trust PLC
• Annual Report and Financial Statements 2023
CONTACT INFORMATION
Directors
John Kay (Chairman)
Matthew Oakeshott
David Smith
Josephine Valentine
Lucy Winterburn
Secretary
Maven Capital Partners UK LLP
First Floor Kintyre House
205 West George Street
Glasgow G2 2LW
Telephone: 0141 306 7400
Website: www.mavencp.com
(Authorised and regulated by the Financial
Conduct Authority)
Registered Office
First Floor Kintyre House
205 West George Street
Registered Number
Registered in Scotland
Company No: SC050366
Legal Entity Identifier:
213800CU1PIC7GAER820
ISIN: GB0008484718
TIDM: VIP
Registrars
Computershare Investor Services PLC
The Pavilions
Bridgwater Road
Bristol BS99 6ZZ
Telephone: 0370 703 0168
Website: www.investorcentre. co.uk/contactus
Independent Auditor
RSM UK Audit LLP
Third Floor Centenary House
69 Wellington Street
Glasgow G2 6HG
Investment Manager
OLIM Property Limited
15 Queen Anne’s Gate
London SW1H 9BU
Telephone: 020 7846 3252
Website: www.olimproperty.co.uk
(Authorised and regulated by the Financial
Conduct Authority)
Matthew.Oakeshott@olimproperty. co.uk
Louise.Cleary@olimproperty.co.uk
Sarah.Martin@olimproperty.co.uk
Alternative Investment
Fund Manager
Value and Indexed Property
Income Services Limited
c/o Maven Capital Partners UK LLP
First Floor Kintyre House
205 West George Street
Glasgow G2 2LW
Registered in Scotland
Registration number: SC467598
Legal Entity Identifier:
213800D7AEDHGXDAM208
(Authorised and regulated by the Financial
Conduct Authority)
Depositary and Custodian
BNP Paribas Securities Services S.A.
London Branch
10 Harewood Avenue
London NW1 6AA
Corporate Broker
Joh. Berenberg, Gossler & Co. KG
60 Threadneedle Street
London EC2R 6HP
Telephone: 020 3207 7800
VALUE AND INDEXED PROPERTY INCOME TRUST PLC
Managed by OLIM Property Limited
15 Queen Anne’s Gate
London
SW1H 9BU
020 7846 3252
www.olimproperty.co.uk
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