Annual Financial Report

RNS Number : 0816A

Value and Income Trust plc

02 June 2016

VALUE AND INCOME TRUST PLC

Annual financial report

FOR THE YEAR ENDED 31 MARCH 2016

SUMMARY

	31 March 2016
Net asset value per share valuing debt at par (including income)	319.0
Net asset value per share valuing debt at market value (including income)	299.2
Ordinary share price	221.8
Discount of ordinary share price to net asset value per share valuing debt at market value (including revenue)	25.9
Total interim dividend and proposed final dividend per share (pence)	10.5
Total assets less current liabilities (£m)	185.5

THE YEAR

§ Net Asset Value total return (with debt at par) of 0.2% over one year and 14.8% over three years.

§ Share price total return of -9.6% over one year and 15.3% over three years.

§ FTSE All-Share Index total return of -3.9% over one year and 11.4% over three years.

§ Dividends for year up 16.7% - increased for the 29th consecutive year.

STRATEGIC REPORT

CHAIRMAN'S STATEMENT

The Board is recommending a substantial increase in the final dividend, which would make total dividends of 10.5p for the year to 31 March 2016, compared to 9p in the previous year, an increase of 16.7%. We hope that this will help to draw attention to the fact that this is Value and Income Trust's 29th year of dividend increases. The table in the Business Review headed "Company Revenue Reserves" shows the position of the revenue reserve after the payment of the proposed final dividend. It is our intention to pay dividends quarterly in future.

We have been concerned for some time about the persistently high discount to Net Asset Value (NAV) on VIT shares. It is 21% (excluding income) as this is written. The increased dividend would put the shares on a dividend yield of 4.7% with the prospect of further increases, especially after the first debenture, which carries an interest rate well above current levels, is repaid. We are proposing that Shareholders should have an opportunity to realise their investment at NAV less costs after November 2026, when the second of our two debentures will be repaid.

We are therefore putting a proposal to Shareholders at our Annual General Meeting in July for an amendment to the Articles of Association which requires the Board to put an Ordinary Resolution to Shareholders in 2024 in relation to the future direction of the Company, including proposals that provide an opportunity for any Shareholder to realise their investment in full at NAV, less costs, by 31 March 2027 at the latest. The reason for doing this in 2024 is to give sufficient time for refinancing the debt or for selling properties as required. We are also proposing to reflect other recent legislative changes in the Articles. Full details of the amendments are set out in the Directors' Report.

To take advantage of the low rates for long term money, we have borrowed £15 million from Santander UK plc for ten years at a rate of 4.5% p.a. including all costs. The money is being invested in properties with yields well above this, and it replaces the original £5 million loan arranged in February 2015. It enables us to look forward to our dividend prospects in the current year with some confidence, although at the moment it is too early to make a forecast.

Debentures are measured at amortised cost in the Financial Statements. The first of our two debentures is repayable for £15,000,000 in 2021 at par (100). In order to calculate our NAV with borrowings at fair value, we value these debentures by reference to the market, which means that the 2021 debenture is valued at £19,463,000. This value will reduce to par by the time that it is repaid and so will increase the NAV over the period, as will the second debenture which is repayable in 2026 for £20,000,000 (currently valued at £27,567,000) (as per note 20 to the Financial Statements). Our two debentures have covenants attached to them. Information about these is included in note 12 to the Financial Statements; there is plenty of headroom in terms of both capital and income.

Over the year to 31 March 2016, the net asset value of the Trust performed well in difficult markets. The performance of our equity portfolio was well ahead of the FTSE All-Share Index. Our property portfolio had a good year and delivered a total return of 10%. However, as a result of the widening of the discount, the share price total return over the year was -9.6%. I have described above the steps which the Board is taking to address this discount. The longer term performance of the Trust continues to be strong: over three years, the share price total return has been 15.3% compared with a total return on the FTSE All-Share Index of 11.4%. No performance fee is payable.

We remain fully invested in equities; as at the year end the portfolio yield was 4.6% and the prospects for dividend growth are reasonably encouraging. Our property portfolio was fully let before the new borrowing referred to above, with leases that have an average unexpired length of 13 years and of which 51% are index-related. Both of the portfolios provide good value when compared to the remarkably low yields available from UK gilts.

I hope that we will see as many Shareholders as possible at the Annual General Meeting on Friday 8 July 2016, which is to be held in Edinburgh. Our Managers will give a brief presentation on the outlook.

James Ferguson

2 June 2016

INVESTMENT MANAGERS' REPORTS

UK EQUITIES

Market Background

VIT's year began with the uncertainty of the impending UK General Election, but after the clear result was delivered, the UK equity market rose. The removal of this major issue was quickly followed by a further crisis over Greek debt repayments, which dominated the news until it was resolved in early July. Concerns regarding economic growth in China then took over the headlines and simultaneously the news channels were reporting the migration crisis affecting Europe. Oil and commodity prices fell heavily and in the first half of VIT's year equity prices everywhere fell. In the second half of our year some recovery was seen but not enough to recover the losses of the first half. Over the year as a whole the FTSE All-Share Index fell by 7.3% and recorded a total return of -3.9%.

During the year sterling weakened against both the US dollar and the euro. The US dollar strengthened in the second half of 2015 when it became clear that the US economy was strengthening and interest rates would begin to rise. Federal Funds' rate rose by 0.25% in December. The euro was particularly weak against sterling in March 2015 at €1.38 and when modest economic growth returned to the Eurozone during 2015, some recovery was seen in the currency, which closed VIT's year end at €1.26. Overseas equity returns, measured in US dollars and euro, were therefore enhanced by the weakness of sterling. The FTSE World Index fell by 5.6%. The USA was strongest with a fall of 0.4% but Germany was very weak, registering a fall of 16.7%.

Within the UK equity market there was a sharp divergence in performance between the various indices. The FTSE High Yield Index fell by 11.7% but the FTSE 250 Index of mid-sized companies fell by just 1.0%. The High Yield Index is heavily dominated by banks, oils and mining companies, which all suffered from the slowdown in global growth and several of the large companies have forecast dividend cuts. The 250 Index has more exposure to the UK economy, which is still growing faster than the Eurozone, though inevitably affected somewhat by the slower growth in the emerging economies.

In fixed interest markets, the FTSE Gilts All Stocks Index recorded a total return of +3.3%. Ten year gilt yields fell from 1.6% at end March 2015 to 1.4% at end March 2016. In times of great anxiety, there is often a flight to the perceived quality of the gilt market, and we expect this movement to reverse in calmer conditions. The oil price dominated sentiment during the second half of our year. Opening our year at $55 it fell dramatically in the beginning of 2016 and recorded a low price of only $27 in January before partially recovering to $40 by the end of our year. At its nadir, rumours began to circulate about the financial health of the banking sector and several major banks had to issue statements to reassure the financial community of the adequacy of their reserves. Investors' nerves were somewhat steadier after this and in the last six weeks of our final quarter equity markets recovered, though many investors remain concerned about the extreme volatility experienced so far in 2016.

Performance

VIT's equity performance was significantly ahead of the FTSE All-Share Index. In capital terms it fell by 4.0%, compared with the fall of 7.3% in the Index and its total return was +0.5% compared to the Index total return of -3.9%. Over the last three years our equity portfolio return has been +17.8% compared to the Index return of +11.4%.

Our underweight allocations to the Bank, Pharmaceutical and Mining sectors continued to make a positive contribution to performance. Our overweighting in Non-Life Insurance and Personal Goods also benefitted the portfolio. In stock selection our holding of Conviviality rose by 66% and Amlin, the specialist insurer, was taken over at a price 32% higher than at the beginning of our year. The housebuilder Crest Nicholson rose by 32% and, in the Electronics sector, Halma rose by 30%. Negative performance in our portfolio came from Rotork (-26%) and Amec Foster Wheeler (-50%) which were both affected by the fall in the oil price, which reduced demand for actuators and oil services.

Portfolio

Sales and purchases of equities over the year totalled £9.96m, with net sales of £0.2m. We sold the holding in Sanne Group after a strong price rise following its initial placing as a public company. We reinvested in Daily Mail and General Trust. We reduced our holdings in Restaurant Group, Unilever and BT Group and we increased the holding in Crest Nicholson, the housebuilder mainly operating in the South of England. We sold the small holding in South32, which had been demerged from BHP Billiton and our holding in Amlin was acquired for cash by Japan's Mitsui Sumitomo Insurance Company. We reinvested in Prudential, again in the insurance sector.

Outlook

In the UK, the Office of Budgetary Responsibility (OBR) downgraded its forecast for UK economic growth in 2016 from 2.4% to 2.0%. The reduction partly reflects the impact of slower growth in China and other export markets. The reduction in forecast growth caused the Chancellor to revise upwards his forecast of borrowing by £38bn. The OBR estimates that government debt has now reached 82% of GDP. The UK government now predicts this will only fall from 2017-18 onwards, two years later than previously estimated. In Europe the political strains caused by the refugee crisis remain acute and economic growth continues to lag behind the US and UK. However investor sentiment was boosted by the ECB's decision to expand its monthly programme of bond purchases from €60bn to €80bn. In addition the ECB signalled that, for the first time, it would purchase non-bank corporate bonds. In the US, sentiment was also helped by comments from Janet Yellen indicating that the Federal Reserve would proceed cautiously in raising interest rates partly due to the risks posed to the US economy from global developments.

The major issues facing investors in the next few months will be the referendum on the UK's EU membership and the stability of the Chinese economy. Mr Cameron returned from his negotiations to reform the European Community with nothing of significance, so voters are faced with the choice of the status quo at best, with less negotiating power going forward, or the journey into the unknown, though with some comfort from our close links with America and our Commonwealth. Currently, the market seems less worried over the outcome of the vote than the Prime Minister. Concerning the Chinese economy, the lower price of oil, which is still 28% lower in the last year, should encourage growth at a later stage. Currently, forecasts for growth in China seem to be settling above 6% for the next two years. The UK market's yield of 3.8% remains nearly three times the gilt yield and we believe it discounts the concerns about Brexit and the slower growth overseas.

Angela Lascelles

OLIM Limited

2 June 2016

PROPERTY PORTFOLIO

The Market

UK commercial property delivered its third consecutive year of double digit returns in 2015, at 13% nominal and 12% real after Retail Price Inflation. Average capital values have now risen by 40% from the depths of the 2008-9 crash but are still 20% below their 2007 peak. Rental values are also growing across the country, but valuation yields have generally bottomed out and have started to edge up again and put prices under pressure in the riskier and overheated parts of the market.

2016 has started slowly with capital values slightly down on average over the first quarter. Larger properties took a 1% Stamp Duty hit in a market where some institutional investors were already getting concerned that the property cycle had peaked and they might suffer further capital outflows after February's high redemptions. Commercial property auctions, however, have been buoyed up by low interest rates and private investors switching from residential buy to let investments which have been hammered by tax, stamp duty and mortgage regulation changes.

Three years of economic recovery are now feeding through into rising rents. Office and industrial/warehouse rents and tenant demand are growing, especially in Southern England. Retail rental growth is slow and patchy, but rents are growing across the South and in some prosperous smaller towns, suburban high streets and edge of town locations throughout the United Kingdom. Medium term rental growth outside London, especially in high streets but also to some extent in industrial, office and other properties, will benefit from the long delayed rates revaluation, which will take effect in April 2017, based on realistic 2015 rents rather than the peak in 2008.

The internet continues to increase its share of shopping spend, but savvier retailers are benefitting from click and collect, while new openings by convenience and discount stores, cafes and bar/restaurants are soaking up surplus space in many high streets and pushing rental values up again in the most prosperous. Prêt à Manger, for example, is now expanding fast outside London into towns like Cheltenham, Salisbury, Milton Keynes, Stratford-upon-Avon and Taunton. Capital and rental values are also rising for leisure property such as pubs, restaurants, cinemas, bowling centres and health and fitness, if they are let to strong established operators or well backed new entrants competing for new units both in and out of town. Leisure property is one of the few property sectors where capital values are still rising and yields falling because it offers long leases and sustainable index-linked rents, with sluggish investors now struggling to increase their weightings and catch up.

Motor trade investments remain in strong demand, as they also offer long leases, often with indexed rents. A record 2.63 million new cars were sold in the UK in 2015. New car retailing has been transformed by cheap manufacturer-backed financing, so it operates much more like the mobile phone market, with customers returning their cars to the dealer for an upgrade every two or three years. Over three quarters of new cars are now financed by lease or hire purchase, against under half seven years ago.

The out of town retail market is more subdued for both occupiers and investors, with B&Q, Homebase (pre the Bunnings takeover), Argos, Morrisons and Tesco shedding space but discounters such as Aldi, Lidl, B&M, Home Bargains and The Range growing aggressively. The main casualties from the new National Living Wage will be in the care home and health sectors, where operators who are heavily reliant on low paid staff and public funding will find cost increases even harder to recoup, with the 2% extra annual Council Tax increase for care funding clearly inadequate across most of the country.

Long term pension fund and insurance company investors are competing to buy "matched investments" with long index-linked leases to cover their annuity and inflation-linked liabilities with realistic returns from well-let property. These are far better value than index-linked gilts at painfully negative real yields, now down to -1%, or conventional gilts with yields near 300 year lows. But capital and rental values are still falling for large supermarkets, in view of the structural shift in demand away from visits to traditional large food stores.

After a satisfactory year of 2% growth, the UK economy has hit a soft patch, with GDP growth slipping to 0.4% in the first quarter and forecasts progressively downgraded. The public sector and trade deficits are still obstinately high, with the oil and commodity markets fragile. The British economy has grown every quarter for three years, but in a rather unbalanced way, with consumer spending and the service sector providing the main stimulus, productivity flat and manufacturing and the balance of payments now deteriorating again. Disappointing world GDP growth is depressing exports and manufacturing output - bright spots such as aerospace, cars and pharmaceuticals are offset by weakness in metals and energy-related industries, while construction is still running well below the demand for new homes and its historic highs.

The speculative bubble in luxury Central London residential developments has now burst, and the stampede to beat the end-March stamp duty increase by buy-to-let investors has left some indigestion. But ultra-low interest rates and chronic supply shortages should support house building and prices in the more affordable regions and price brackets.

Inflation in most developed economies remains subdued, with low energy and food prices boosting real incomes. But price inflation ticked up a little in Britain in March as oil prices stabilised and sterling came under pressure.

UK property offers outstanding value at a yield premium of 4 points above long-dated conventional gilts and almost 7 points over long-dated index-linked. As an each-way bet offering a high initial yield with some longer term inflation protection, it is likely to stay in demand for the next few years. UK property yields are also attractive against UK equities, because dividends earned from overseas in particular are under pressure but UK domestic rent payers are in reasonable health and real rents are recovering well since they tend to lag rather than lead economic recovery.

Individual properties and small portfolios for sale between £2m and £10m offer the best investment value now, as they are too large for most private investors but below most institutional and overseas investors' radar. Only 5% of properties in the IPD Monthly Index are now let at above current market rents, an 8 year low, with reversionary potential at an 8 year high, pointing to continued rental growth.

The main downside risk to UK property values would be a vote to withdraw in the European Referendum. Central London offices, valued off very low yields and very high rents, are now priced for paradise but face a perfect storm of Brexit, rates revaluation and transparency as the crackdown on money laundering and tax haven secrecy gathers pace. If the vote were Leave, their rents could easily fall by a tenth and valuation yields rise by a point, cutting capital values by a quarter. But the damage should be much more limited across the provincial property market, which has stickier tenants than the City of London or Canary Wharf, and a much thicker yield cushion against rising interest rates.

The Portfolio

VIT's property portfolio produced a total return of 5% over the past 6 months, and 10% over the year to March. Our index-related properties produced a total return of 13% last year, against 7% for non-indexed properties. VIT's property record over the past 29 years against the main property benchmark, the IPD Annual Index, which covers calendar years, is shown in the table "VIT's Property Record" in the property section of the Investment Managers' Report.

We concentrate on properties with strong income streams to cover the fixed interest payments on our debt and deliver long-term income and capital growth. The total return on our property portfolio has averaged 9% a year over the past 5 years, 8% over 10 years, 12% over 20 years and 13% a year over the 29 years since the start. These returns are below the IPD average over 5 years but above over longer periods. Real returns over the R.P.I. from VIT's property portfolio have averaged 5-6% a year over the past 5 and 10 years and 7-8% a year over longer periods.

Five mainly overrented shops were sold for £3.5 million at a net yield of 8% during the year, in Ayr, Kelso and Oban in Scotland and Lynton and Melton Mowbray in England. £2.8 million of the sale proceeds were re-invested in two shops in High Street, Stratford-upon-Avon at a net initial yield of 8.7% after the sale of the upper parts.

Since our year end we have also sold three more small properties in Ayr, Dundee and Sherborne for £2.6 million at a net yield of 5.7% and bought a shop in Bedford and a pub/restaurant in Thornton-Cleveleys for £2.8 million in total at a net yield of 7.7%. All properties are fully let on full repairing and insuring leases, with upward only rent reviews and an average unexpired lease length of 13 years. The portfolio has been fully let and income-producing throughout the year apart, briefly, the vacant upper parts above the shops at Stratford- upon-Avon. 25% of rental income is reviewed annually, with 75% five yearly. 51% of the portfolio's rental income comes from index-related leases (up from 35% four years ago).

The property portfolio has been funded for many years by long term fixed rate loans - £20 million of VIT 9^3/8% Debenture Stock repayable in 2026 and £15 million of VIT 11% Debenture Stock repayable in 2021. Because these Debenture Stocks were issued at a premium, their effective interest cost averaged 9%, which compares with the 13% p.a. long-term return from VIT's properties. Interest rates have now fallen so low compared to property yields that we borrowed £5 million in March 2015 for five years at a fixed interest rate of 4% p.a. and invested it in property let to good covenants, at an average yield of 7% increasing VIT's net income by over £100,000 a year. We increased this loan on 13 May to £15 million at a fixed interest rate of 4.5% until 2026 and intend to invest the net additional funds of £10 million in suitable properties over the next few months.

Results of Independent Revaluation

The VIT property portfolio was subject to an independent professional revaluation at 31 March 2016 by Savills. The revaluation showed a value of £55,125,000. Our properties are revalued every six months, at 30 September and 31 March.

Capital values rose by 3% over the year and rental income rose by 1% on a like for like basis. Twenty-eight of the properties valued at 31 March 2016 were freehold or the Scottish equivalent and one is leasehold with 42 years to run.

Matthew Oakeshott and Louise Cleary

OLIM Property Limited

2 June 2016

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 which invests in accordance with the investment aims and investment policy below.

The Group

Value and 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).

Investment Aims

The Company invests in higher yielding, less fashionable areas of the UK commercial property and quoted equity markets, particularly in medium and smaller sized companies. 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 quoted UK equities, UK commercial property and cash or near cash securities. It is not normally the Company's policy to invest in overseas shares or in unquoted companies. UK equities usually account for between half and three- quarters of the total portfolio and property for a quarter to a half but the asset allocation may go outside these ranges if relative market levels and investment value, or a desired increase in cash or near cash securities, make it appropriate.

The Company focuses on the fundamental values and incomes of businesses in which it invests - their profitability, cash flows, balance sheets, management and products or services - and the location, tenants and leases of its property investments. The equity portfolio has generally yielded more than the FTSE All-Share Index. The Group has held between 30 and 40 individual shareholdings and between 20 and 32 individual properties in recent years. These ranges may change as market conditions or the size of each portfolio vary in future. In order to limit the risk to the equity portfolio that is derived from any particular investment, no individual shareholding will account for more than 10% of the equity portfolio at the time of purchase.

The Company has, since 1986, had a long standing policy of increasing its exposure to equities and to property through the judicious use of borrowings. Until recently, all borrowings have been long term debentures to provide secure long term funding, avoiding the risks associated with short term funding of having to sell illiquid assets at a low point in markets if loans have to be repaid. On 26 February 2015, a five year secured term loan facility of £5m was arranged with Santander UK plc at a five year fixed interest rate of 4% p.a. including all costs. This loan was refinanced on 13 May 2016 and a new ten year secured term loan facility of £15m was arranged with Santander UK plc at a ten year interest rate of 4.5% p.a including all costs to replace the original £5m loan arranged in February 2015.

Gearing has varied between 25% and 40% 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.

No material changes may be made to the Company's investment policy described above without the prior approval of Shareholders by the passing of an Ordinary Resolution.

Performance, Results and Dividend

A review of the performance of the equity and property portfolios is detailed in the Chairman's Statement and in the Investment Managers' Reports. The Directors recommend that a final dividend of 6.0p per share (2015: 4.7p) is paid on 15 July 2016 to Shareholders on the register on 17 June 2016. The ex-dividend date is 16 June 2016.

An interim dividend of 4.5p per share (2015: 4.3p) was paid to Shareholders on 4 January 2016.

Principal Risks and Uncertainties

The Board carries out a regular review and robust assessment of the principal risks facing the Group including those that would threaten its business model, future performance, solvency or liquidity. The principal risks and uncertainties which affect the Group'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 three elements - price risk, interest rate risk and currency 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.

It is the Board's policy to hold an appropriate spread of investments in the portfolio in order to reduce the risk arising from factors specific to a particular sector. For equities, both asset allocation and stock selection as set out in the Investment Policy, act to reduce market risk. VIS delegates its portfolio management responsibilities to the Investment Managers, OLIM Limited (OLIM) and OLIM Property Limited (OLIM Property) (collectively, the Managers) who monitor market prices throughout the year and report to VIS and the Board, who meet regularly in order to review investment strategy. The equity investments held by the Group are listed on the UK Stock Exchange. All investment properties held by the Group are commercial properties located in the UK with long, strong income streams.

Interest rate risk

Interest rate movements may affect:

- the fair value of the investments in property; and

- the level of income receivable on cash deposits.

The possible effects on fair value and cash flows that could arise as a result of changes in interest rates are taken into account when making investment and borrowing decisions.

The Board imposes borrowing limits to ensure that gearing levels are appropriate to market conditions and reviews these on a regular basis. Current borrowings comprise debenture stock and the ten year secured term loan, providing secure long term funding. It is the Board's policy to maintain a gearing level, measured on the most stringent basis of calculation after netting off cash equivalents, of between 25% and 40%.

Currency risk

A small proportion of the Group's investment portfolio is invested in securities whose fair value and dividend stream are affected by movements in foreign exchange rates. It is not the Company's policy to hedge this risk.

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 readily realisable securities which can be sold to meet commitments, if required, and investment properties which, by their nature, are less readily realisable. The maturity of the Company's existing borrowings is set out in the interest risk profile section of note 20 of the Financial Statements.

Credit risk

This is the failure of a counterparty to a transaction to discharge its obligations under that transaction that could result in the Group suffering a loss.

The risk is not significant and is managed as follows:

- investment transactions are carried out with a large number of brokers, whose credit standing is reviewed periodically by OLIM (who report to VIS) and limits are set on the amount that may be due from any one broker.

- the risk of counterparty exposure due to failed trades causing a loss to the Group is mitigated by the review of failed trade reports on a daily basis. In addition, a stock reconciliation to third party administrators' records is performed on a daily basis to ensure that discrepancies are picked up on a timely basis. OLIM's Compliance Officer (together with VIS) carry out periodic reviews of the Depositary's operations and report their findings to the OLIM and VIS Risk Committees. This review will also include checks on the maintenance and security of investments held.

- cash is held only with reputable banks with high quality external credit ratings which are monitored on a regular basis.

None of the Group's equity investments is secured by collateral or other credit enhancements.

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 is 13 years (2015: 13½ years). Details of the tenant and geographical spread of the portfolio and the long term record of performance through the varying property cycles since 1987 is set out in the property section of the Investment Managers' Report. OLIM Property is responsible for property investment management, with surveyors, solicitors and managing agents acting on the portfolio under OLIM Property's supervision.

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 Group operates in a complex regulatory environment and faces a number of regulatory risks. A breach of Section 1158 of the Corporation Tax Act 2010 (Section 1158) would result in the Company being subject to capital gains tax on portfolio investments. Breaches of other regulations, including the Companies Act 2006, the FCA Listing Rules or the FCA Disclosure and Transparency Rules, could lead to a number of detrimental outcomes and reputational damage. Breaches of controls by service providers to the Company could also lead to reputational damage or loss. The Audit and Management Engagement Committee monitors compliance with regulations by reviewing internal control reports from the Administrator and the Managers.

The Alternative Investment Fund Managers Directive (AIFMD) introduced a new authorisation and supervisory regime for all managers of authorised investment funds in the European Union.

In accordance with the requirements of the AIFMD, the Company appointed VIS as its AIFM and BNP Paribas Securities Services as its Depositary. 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

The Directors have identified the three key performance indicators below to determine the performance of the Company:

- Share price total return relative to the FTSE All-Share Index (total return);

- Net asset value total return relative to the FTSE All-Share Index (total return); and

- Dividend growth relative to the Retail Prices Index

At each Board Meeting, the Directors consider a number of performance measures to assess the Company's success in achieving its objectives.

A historical record of these measures, with comparatives is shown in the Financial Highlights and Long Term Record.

Statement of Compliance with Investment Policy

The Company is adhering to its stated investment policy and managing the risks arising from it. This can be seen in various tables and charts throughout the Annual Report, and from the information provided in the Chairman's Statement, and the Investment Managers' Reports.

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 Managers through members of their portfolio management teams. 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.

Future Strategy

The Board and the Managers intend to maintain the strategic policies set out above for the year ending 31 March 2017 as it is believed that these are in the best interests of Shareholders.

James Ferguson

Chairman

2 June 2016

STATEMENT OF DIRECTORS' RESPONSILIBITIES

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

Company law requires the Directors to prepare Financial Statements for each financial year. Under that law, the Directors are required to prepare the Group Financial Statements in accordance with IFRS as adopted by the EU and Article 4 of the EU IAS Regulation and have also chosen to prepare the parent company financial statements under IFRS as adopted by the EU. The Financial Statements are required by law to give a true and fair view of the state of affairs of the Company and of the net return of the Company for that period. In preparing these Financial Statements, the Directors are required to:

- select suitable accounting policies and then apply them consistently;

- make judgments and estimates that are reasonable and prudent;

- state whether applicable IFRS have been followed, 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 Company will continue in business.

The Directors are responsible for keeping proper accounting records that disclose with adequate accuracy at any time the financial position of the Company and enable them to ensure that the Financial Statements comply with the Companies Act. They are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

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

The Directors are responsible for the maintenance and integrity of the corporate and financial information included on the Company's websites hosted by the Managers. Legislation in the United Kingdom governing the preparation and dissemination of Financial Statements may differ from legislation in other jurisdictions.

The Directors are also responsible for ensuring that the Annual Report and Financial Statements, taken as a whole is fair, balanced and understandable and provides the information necessary to assess the Company's position and performance, business model and strategy.

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 accounting standards and give a true and fair view of the assets, liabilities, financial position and profit or loss of the Company and its undertakings as at 31 March 2016 and for the year to that date; and that

- the Strategic Report includes a fair review of the development and performance of the business and the position of the Company and the undertakings included in the consolidation taken as a whole, together with a description of the principal risks and uncertainties that it faces.

The Directors confirm that the Annual Report and Financial Statements taken as a whole is fair, balanced and understandable and provides the information necessary to assess the Company's position and performance, business model and strategy.

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

James Ferguson

Chairman

2 June 2016

VALUE AND INCOME TRUST PLC

GROUP STATEMENT OF COMPREHENSIVE INCOME

			Year ended			Year ended
			31 March 2016			31 March 2015
			Revenue	Capital	Total	Revenue	Capital	Total
			£'000	£'000	£'000	£'000	£'000	£'000
Income		Note
	Dividend income		5,898	-	5,898	5,207	-	5,207
	Rental income		3,937	-	3,937	3,636	-	3,636
	Other income		1	-	1	14	-	14
		2	9,836	-	9,836	8,857	-	8,857
Gains and losses on investments
	Realised gains on held-at-fair-value investments and investment properties	9	-	1,759	1,759	-	4,857	4,857
	Unrealised losses on held-at-fair-value investments and investment properties	9	-	(5,295)	(5,295)	-	(3,431)	(3,431)
	Net currency losses		-	-	-	-	(3)	(3)
Total income			9,836	(3,536)	6,300	8,857	1,423	10,280
Expenses
	Investment management fees	3	(361)	(843)	(1,204)	(363)	(1,153)	(1,516)
	Other operating expenses	4	(777)	-	(777)	(660)	-	(660)
Finance costs		5	(3,702)	-	(3,702)	(3,516)	-	(3,516)
Total expenses			(4,840)	(843)	(5,683)	(4,539)	(1,153)	(5,692)

Profit before tax			4,996	(4,379)	617	4,318	270	4,588
Taxation		6	-	-	-	-	-	-
Total Comprehensive Income for the Year			4,996	(4,379)	617	4,318	270	4,588

Earnings per ordinary share (pence)		7	10.97	(9.61)	1.36	9.48	0.59	10.07

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.

All income is attributable to the equity holders of Value and Income Trust PLC, the parent company. There are no minority interests.

The Board is proposing a final dividend of 6.0p per share, making a total dividend of 10.5p per share for the year ended 31 March 2016 (2015: 9.0p per share) which, if approved, will be payable on 15 July 2016 (see note 8).

VALUE AND INCOME TRUST PLC

COMPANY STATEMENT OF COMPREHENSIVE INCOME

			Year ended			Year ended
			31 March 2016			31 March 2015
			Revenue	Capital	Total	Revenue	Capital	Total
			£'000	£'000	£'000	£'000	£'000	£'000
Income		Note
	Dividend income		5,898	-	5,898	5,207	-	5,207
	Rental income		3,937	-	3,937	3,636	-	3,636
	Other income		1	-	1	14	-	14

		2	9,836	-	9,836	8,857	-	8,857
Gains and losses on investments
	Realised gains on held-at-fair-value investments and investment properties	9	-	1,759	1,759	-	4,857	4,857
	Unrealised losses on held-at-fair-value investments and investment properties	9	-	(4,663)	(4,663)	-	(2,803)	(2,803)
	Net currency losses		-	-	-	-	(3)	(3)

Total income			9,836	(2,904)	6,932	8,857	2,051	10,908

Expenses
	Investment management fees	3	(361)	(843)	(1,204)	(363)	(1,153)	(1,516)
	Other operating expenses	4	(777)	-	(777)	(657)	-	(657)

Finance costs		5	(3,702)	-	(3,702)	(3,516)	-	(3,516)

Total expenses			(4,840)	(843)	(5,683)	(4,536)	(1,153)	(5,689)

Profit before tax			4,996	(3,747)	1,249	4,321	898	5,219

Taxation		6	-	-	-	-	-	-

Total Comprehensive Income for the Year			4,996	(3,747)	1,249	4,321	898	5,219

Earnings per ordinary share (pence)		7	10.97	(8.23)	2.74	9.48	1.97	11.45

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.

All income is attributable to the equity holders of Value and Income Trust PLC, the parent company. There are no minority interests.

VALUE AND INCOME TRUST PLC

STATEMENT OF FINANCIAL POSITION

			Group				Company
			As at		As at		As at		As at
			31 March 2016		31 March 2015		31 March 2016		31 March 2015
		Note	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000
ASSETS
Non current assets
	Investments held at fair value through profit or loss	9		127,266		132,133		127,466		132,333
	Investment properties	9		55,125		54,500		55,125		54,500

				182,391		186,633		182,591		186,833

Current assets
	Cash and cash equivalents		3,481		4,693		3,281		4,493
	Other receivables	10	755		625		755		625
				4,236		5,318		4,036		5,118


TOTAL ASSETS				186,627		191,951		186,627		191,951

Current liabilities
	Other payables	11		(1,152)		(2,900)		(1,152)		(2,900)

TOTAL ASSETS LESS CURRENT LIABILITIES				185,475		189,051		185,475		189,051

Non-current liabilities
	Borrowings	12		(40,167)		(40,169)		(43,321)		(43,955)

NET ASSETS				145,308		148,882		142,154		145,096

EQUITY ATTRIBUTABLE TO EQUITY SHAREHOLDERS

	Called up share capital	14		4,555		4,555		4,555		4,555
	Share premium	15		18,446		18,446		18,446		18,446
	Retained earnings	16		122,307		125,881		119,153		122,095

TOTAL EQUITY				145,308		148,882		142,154		145,096


Net Asset Value per ordinary share (pence)		17		319.01		326.85		312.08		318.54

These financial statements were approved by the Board on 2 June 2016 and were signed on its behalf by:-

James Ferguson, Chairman

Matthew Oakeshott, Director

VALUE AND INCOME TRUST PLC

STATEMENTS OF CHANGES IN EQUITY

Group		Year ended 31 March 2016
		Share	Share	Retained
		capital	premium	earnings	Total
	Note	£'000	£'000	£'000	£'000
Net assets at 31 March 2015		4,555	18,446	125,881	148,882
Net profit for the year		-	-	617	617
Dividends paid	8	-	-	(4,191)	(4,191)
Net assets at 31 March 2016		4,555	18,446	122,307	145,308

Company
		Year ended 31 March 2016
		Share	Share	Retained
		capital	premium	earnings	Total
		£'000	£'000	£'000	£'000
Net assets at 31 March 2015		4,555	18,446	122,095	145,096
Net profit for the year		-	-	1,249	1,249
Dividends paid	8	-	-	(4,191)	(4,191)
Net assets at 31 March 2016		4,555	18,446	119,153	142,154

Group		Year ended 31 March 2015
		Share	Share	Retained
		capital	premium	earnings	Total
	Note	£'000	£'000	£'000	£'000
Net assets at 31 March 2014		4,555	18,446	125,256	148,257
Net profit for the year		-	-	4,588	4,588
Dividends paid	8	-	-	(3,963)	(3,963)
Net assets at 31 March 2015		4,555	18,446	125,881	148,882

Company
		Year ended 31 March 2015
		Share	Share	Retained
		capital	premium	earnings	Total
		£'000	£'000	£'000	£'000
Net assets at 31 March 2014		4,555	18,446	120,839	143,840
Net profit for the year		-	-	5,219	5,219
Dividends paid	8	-	-	(3,963)	(3,963)
Net assets at 31 March 2015		4,555	18,446	122,095	145,096

VALUE AND INCOME TRUST PLC

GROUP STATEMENT OF CASHFLOWS

For the year ended 31 March				2016		2015
			Notes	£'000	£'000	£'000	£'000
	Cash flows from operating activities
		Dividend income received			5,608		5,151
		Rental income received			3,374		3,567
		Interest received			1		7
		Other income received			-		8
		Operating expenses paid			(1,830)		(2,495)
		Taxation received			-		73

	NET CASH FROM OPERATING ACTIVITIES		18		7,153		6,311

	Cash flows from investing activities
		Purchase of investments		(8,935)		(17,267)
		Sale of investments		8,462		14,943

	NET CASH OUTFLOW FROM
	INVESTING ACTIVITIES				(473)		(2,324)

	Cash flow from financing activities
		Loans drawn down		-		4,889
		Interest paid		(3,701)		(3,525)
		Dividends paid	8	(4,191)		(3,963)

	NET CASH OUTFLOW FROM FINANCING ACTIVITIES				(7,892)		(2,599)

	NET (DECREASE)/ INCREASE IN CASH AND CASH EQUIVALENTS				(1,212)		1,388
	Cash and cash equivalents at 1 April 2015				4,693		3,308
	Foreign exchange movements				-		(3)

	Cash and cash equivalents at 31 March 2016				3,481		4,693

VALUE AND INCOME TRUST PLC

COMPANY STATEMENT OF CASHFLOWS

For the year ended 31 March				2016		2015
			Notes	£'000	£'000	£'000	£'000
	Cash flows from operating activities
		Dividend income received			5,608		5,151
		Rental income received			3,374		3,958
		Interest received			1		7
		Other income received			-		8
		Operating expenses paid			(1,830)		(2,678)
		Taxation received			-		73

	NET CASH FROM OPERATING ACTIVITIES		18		7,153		6,519

	Cash flows from investing activities
		Purchase of investments		(8,935)		(17,467)
		Sale of investments		8,462		28,197
		Decrease in loan to subsidiary		-		(12,248)
	NET CASH OUTFLOW FROM
	FROM INVESTING ACTIVITIES				(473)		(1,518)

	Cash flow from financing activities
		Loans drawn down		-		4,889
		Interest paid		(3,701)		(3,525)
		Dividends paid	8	(4,191)		(3,963)

	NET CASH OUTFLOW FROM FINANCING ACTIVITIES				(7,892)		(2,599)

	NET (DECREASE)/ INCREASE IN CASH AND CASH EQUIVALENTS				(1,212)		2,402
	Cash and cash equivalents at 1 April 2015				4,493		2,094
	Foreign exchange movements				-		(3)

	Cash and cash equivalents at 31 March 2016				3,281		4,493

VALUE AND INCOME TRUST PLC

NOTES TO THE FINANCIAL STATEMENTS

1 Accounting policies

The financial statements have been prepared in accordance with International Financial Reporting Standards (IFRSs) which comprise standards and interpretations approved by the International Accounting Standards Board (IASB) together with interpretations of the International Accounting Standards and Standing Interpretations Committee approved by the International Accounting Standards Committee (IASC) that remain in effect, and to the extent that they have been adopted by the European Union.

The functional and presentational currency of the Group and Company is pounds sterling because that is the currency of the primary economic environment in which the Group and Company operate. The financial statements and the accompanying notes are presented in pounds sterling and rounded to the nearest thousand pounds except where otherwise indicated.

(a) Basis of preparation

The financial statements have been prepared on a going concern basis and on the historical cost basis, except for the revaluation of certain financial assets. 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 November 2014 is consistent with the requirements of IFRSs, the directors have sought to prepare the financial statements on a basis compliant with the recommendations of the SORP, except for the allocation of finance costs to revenue 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 Managers but the Board retains responsibility to ensure that adequate resources of the Group are directed in accordance with its decisions. The Board is of the view that the Group is engaged in a single segment of business, being investments in quoted UK equities and UK commercial properties. The view that the Group is engaged in a single segment of business is based on the fact that one of the key financial indicators received and reviewed by the Board is the total return from the investment portfolio taken as a whole. A review of the investment portfolio is included in the Investment Managers' Reports.

(b) Going concern

The Group's business activities, together with the factors likely to affect its future development and performance, are set out in the Strategic Report. The financial position of the Group as at 31 March 2016 is shown in the Statement of Financial Position. The cash flows of the Group for the year ended 31 March 2016, which are not untypical, are set out in the Statement of Cashflows. The Group had fixed debt totalling £40,167,000 as at 31 March 2016, as set out in the Statement of Cashflows; none of the borrowings is repayable before 2020. The Group had no short term borrowings. Note 20 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 2016, the Group's total assets less current liabilities exceeded its total non current liabilities by a factor of over four. The assets of the Group consist mainly of securities and investment properties that are held in accordance with the Group's investment policy. Most of these securities are readily realisable, even in volatile markets. The Directors, who have reviewed carefully the Group's forecasts for the coming year, consider that the Group has adequate financial resources to enable it to continue in operational existence for the foreseeable future. Accordingly, the Directors believe that it is appropriate to continue to adopt the going concern basis in preparing the Financial Statements

The consolidated financial statements incorporate the financial statements of the Company and the entity controlled by the Company (its subsidiary). An investor controls an investee when it is exposed, or has rights, to variable returns from its involvement with the investee and has ability to affect those returns through its power over the investee. The Company consolidates the investee that it controls. All intra-group transactions, balances, income and expenses are eliminated on consolidation. The investment in the subsidiary is recognised at fair value in the financial statements of the Company. This is considered to be the net asset value of the shareholders' funds, as shown in its Statement of Financial Position.

Value and Income Services Limited is a private limited company incorporated in Scotland under company number SC467598. It is a wholly owned subsidiary of the Company and has been appointed to act as the Alternative Investment Fund Manager of the Company.

(d) Presentation of Statement of Comprehensive Income

In order to reflect better the activities of an investment trust company and in accordance with guidance issued by the AIC, supplementary information which analyses the Statement of Comprehensive Income between items of a revenue and capital nature has been presented alongside the Statement of Comprehensive Income. In accordance with the Company's Articles, net capital returns may not be distributed by way of dividend.

Additionally the net revenue is the measure that the Directors believe to be appropriate in assessing the Company's compliance with certain requirements set out in sections 1158-1160 of the Corporation Tax Act 2010.

(e) Income

Dividend income from investments is recognised as revenue for the period on an ex-dividend basis. Where no ex-dividend date is available, dividends receivable on or before the period end are treated as revenue for the period.

Where the Group has elected to receive dividend income in the form of additional shares rather than cash, the amount of cash dividend foregone is recognised as income. Any excess in the value of shares received over the amount of cash dividend foregone is recognised as a gain in the income statement.

Interest receivable from cash and short term deposits and interest payable is accrued to the end of the period.

Rental receivable and lease incentives, where material, from investment properties under operating leases are recognised in the Statement of Comprehensive Income over the term of the lease on a straight line basis. Other income is recognised on an accruals basis.

(f) Expenses and Finance Costs

All expenses and finance costs are accounted for on an accruals basis. Expenses are presented as capital where a connection with the maintenance or enhancement of the value of investments can be demonstrated. In this respect and in accordance with the SORP, the investment management fees are allocated 30% to revenue and 70% to capital to reflect the Board's expectations of long term investment returns. Any performance fees payable are allocated to capital, reflecting the fact that, although they are calculated on a total return basis, they are expected to be attributable largely to capital performance.

It is normal practice and in accordance with the SORP for investment trust companies to allocate finance costs to capital on the same basis as the investment management fee allocation. However as the Company has a significant exposure to property, and property companies allocate finance costs to revenue to match rental income, the Directors consider that, contrary to the SORP, it is inappropriate to allocate finance costs to capital.

(g) Other Receivables and Payables

Other receivables do not carry any interest and are stated at their nominal value, as reduced by appropriate allowances for any estimated irrecoverable amounts. Other payables are not interest bearing and are stated at their nominal value.

(h) Taxation

The Company's liability for current tax is calculated using tax rates that have been enacted or substantially enacted by the date of the Statement of Financial Position.

Deferred tax is recognised in respect of all temporary differences that have originated but not reversed at the date of the Statement of Financial Position, where transactions or events that result in an obligation to pay more tax in the future or the right to pay less tax in the future have occurred at the date of the Statement of Financial Position.

This is subject to deferred tax assets only being recognised if it is considered probable that there will be suitable profits from which the future reversal of the temporary differences can be deducted.

Due to the Company's status as an investment trust company, and the intention to continue to meet the conditions required to maintain approval for the foreseeable future, the Company has not provided deferred tax on any capital gains and losses arising on the revaluation or disposal of investments.

(i) Dividends payable

Interim dividends are recognised as a liability in the period in which they are paid as no further approval is required in respect of such dividends. Final dividends are recognised as a liability only after they have been approved by Shareholders in general meeting.

(j) Investments

Equity investments

All investments have been designated upon initial recognition as held at fair value through profit or loss. Investments are recognised and derecognised on the trade date where a purchase or sale is under a contract whose terms require delivery within the timeframe established by the market concerned, and are initially measured at fair value.

Subsequent to initial recognition, investments are recognised at fair value through profit or loss. For listed investments, this is deemed to be bid market prices or closing prices for SETS stocks sourced from the London Stock Exchange. SETS is the London Stock Exchange electronic trading service covering most of the market including all FTSE 100 constituents and most liquid FTSE 250 constituents along with some other securities. Gains and losses arising from changes in fair value are included in net profit or loss for the period as a capital item in the Statement of Comprehensive Income and are ultimately recognised in the retained earnings.

Investment property

Investment properties are initially recognised at cost, being the fair value of consideration given, including transaction costs associated with the investment property. Any subsequent capital expenditure incurred in improving investment properties is capitalised in the period incurred and included within the book cost of the property.

After initial recognition, investment properties are measured at fair value, with gains and losses recognised in the Statement of Comprehensive Income.

As disclosed in Note 20, the group leases out all of its properties on operating leases. A property held under an operating lease is classified and accounted for as an investment property where the group holds it to earn rental, capital appreciation or both. Any such property leased under an operating lease is carried at fair value. Fair value is established by half-yearly professional valuation on an open market basis by Savills (UK) Limited, Chartered Surveyors and Valuers, and in accordance with the RICS Valuation - Professional Standards (9th edition as updated). The determination of fair value by Savills is supported by market evidence. It is not more heavily based on other factors because of the nature of the properties and the availability of comparable market data. These valuations are disclosed in Note 9.

The Company accounts for its investment in its subsidiary at fair value. All fair value adjustments in relation to the subsidiary are eliminated on consolidation.

(k) Cash and cash equivalents

Cash and cash equivalents comprises deposits held with banks.

(l) Non - current liabilities

All new loans and borrowings are initially recognised at cost, being the fair value of the consideration received, less issue costs where applicable. After initial recognition, 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.

(m) Critical accounting judgements and key estimates

The preparation of the financial statements requires the Directors to make judgements, estimates and assumptions that may affect the application of accounting policies and the reported amounts of assets and liabilities, income and expenses. The critical accounting area involving a higher degree of judgement or complexity comprises the determination of fair value of the investment properties. The Group engages independent professional qualified valuers to perform the valuation. Information about the valuation techniques and inputs used in determining fair value as at 31 March 2016 is disclosed in note 9 to the financial statements.

(n) 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 (and in some cases, had not yet been adopted by the EU).

• IFRS 9: Financial Instruments (2014) (effective 1 January 2018).

• Amendments to IAS 1: Presentation of Financial Statements (effective 1 January 2016).

• Amendments to IAS 7: Disclosure initiative - Statement of Cash Flows (effective 1 January 2017).

• Amendment to IAS 12: Income Taxes - Recognition of deferred tax assets for unrealised losses

(effective 1 January 2017).

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.

		2016		2015
		Group	Company	Group	Company
		£000	£000	£000	£000
2	Income
	Investment income
	Dividends from listed investments in UK	5,898	5,898	5,207	5,207

	Other operating income
	Rental income	3,937	3,937	3,636	3,636
	Interest receivable on short term deposits	1	1	6	6
	Underwriting commission	-	-	8	8

	Total income	9,836	9,836	8,857	8,857

			2016			2015
		Revenue	Capital	Total	Revenue	Capital	Total
		£000	£000	£000	£000	£000	£000
3	Investment management fee

	Group
	Investment management fee	361	843	1,204	363	848	1,211
	Performance fee	-	-	-	-	305	305

		361	843	1,204	363	1,153	1,516


	Company
	Investment management fee	361	843	1,204	363	848	1,211
	Performance fee	-	-	-	-	305	305

		361	843	1,204	363	1,153	1,516

			2016		2015
			Group	Company	Group	Company
			£000	£000	£000	£000
4	Other operating expenses
	Auditors' remuneration
		- audit	30	30	30	30
		- other non-audit services	7	7	11	11
		- taxation compliance services	6	6	7	7
	Directors' fees		54	54	54	54
	NIC on Directors' fees		4	4	4	4
	Fees for Company Secretarial services		176	176	190	190
	Direct property costs		11	11	(38)	(38)
	Other expenses		489	489	402	399

			777	777	660	657

Other non-audit services provided by the Auditor comprise review of compliance with covenants and the liquidation of a subsidiary.

Directors' fees comprise the Chairman's fees of £22,000 (2015 - £22,000) and fees of £16,000 (2015 - £16,000) per annum paid to each other director. The Directors' fees of £16,000 each (2015 - £16,000) in respect of the qualifying services provided by Angela Lascelles and Matthew Oakeshott are included in the investment management fees payable to OLIM Limited and OLIM Property Limited as detailed below.

Angela Lascelles is a director of OLIM Limited which received an investment management fee of £873,000 (2015 - £878,000) and a performance fee of £nil (2015 - £215,000), the basis of calculation of which is given in the Directors' Report.

Matthew Oakeshott is a director of OLIM Property Limited which received an investment management fee of £331,000 (2015 - £333,000) and a performance fee of £nil (2015 - £90,000), the basis of calculation of which is given in the Directors' Report.

Additional information on Directors' fees is given in the Directors' Remuneration Report

		2016			2015
		Group	Company		Group	Company
		£'000	£'000		£'000	£'000
5	Finance costs
	Interest payable on:
	11% First Mortgage Debenture Stock 2021	1,650		1,650	1,650	1,650
	9.375% Debenture Stock 2026	1,875		1,875	1,875	1,875
	Less amortisation of issue premium	(24)		(24)	(23)	(23)
	Loan interest payable	179		179	12	12
	Amortisation of loan expenses	22		22	2	2

		3,702	3,702		3,516	3,516

			2016			2015
		Revenue	Capital	Total	Revenue	Capital	Total
		£'000	£'000	£'000	£'000	£'000	£'000
6	Taxation

a)	Analysis of the tax charge for the year:
	Group
	Corporation tax payable	-	-	-	-	-	-
		-	-	-	-	-	-

	Factors affecting the current tax charge for year:
	Revenue / capital return on ordinary activities before tax			617			4,588

	Tax thereon at 20% (2015 - 21%)			123			963
	Effects of:
	Non taxable dividends			(1,180)			(1,093)
	Losses/(gains) on investments not taxable			707			(299)
	Excess expenses not utilised			350			429
				-			-

			2016			2015
		Revenue	Capital	Total	Revenue	Capital	Total
		£'000	£'000	£'000	£'000	£'000	£'000
	Company
	Corporation tax payable	-	-	-	-	-	-

		-	-	-	-	-	-

	Factors affecting the current tax charge for year:
	Revenue / capital return on ordinary activities before tax			1,249			5,219

	Tax thereon at 20% (2015 - 21%)			250			1,096
	Effects of:
	Non taxable dividends			(1,180)			(1,093)
	Losses/(gains) on investments not taxable			581			(431)
	Excess expenses not utilised			349			428
				-			-

b) Factors affecting the tax charge for the year

The Company and Group have losses for tax purposes arising in the year of £1,838,000 (2015 - £3,508,000). Under current legislation, it is unlikely that these losses will be capable of offset against the Group's future taxable profits.

c) Factors affecting future tax charges

The Company and Group have deferred tax assets of £4,791,000 (2015 - £5,174,000) at 31 March 2016 relating to total accumulated unrelieved tax losses carried forward of £26,616,000 (2015 - £24,871,000). These have not been recognised in the financial statements as it is unlikely that they will be capable of offset against the Group's future taxable profits.

		2016		2015
		Group	Company	Group	Company
		£'000	£'000	£'000	£'000
7	Return per ordinary share
	The return per ordinary share is based on the following figures:
	Revenue return	4,996	4,996	4,318	4,321
	Capital return	(4,379)	(3,747)	270	898
	Weighted average ordinary shares in issue	45,549,975	45,549,975	45,549,975	45,549,975
	Return per share - revenue	10.97p	10.97p	9.48p	9.48p
	Return per share - capital	(9.61p)	(8.23p)	0.59p	1.97p

	Total return per share	1.36p	2.74p	10.07p	11.45p

		2016	2015
		£'000	£'000
8	Dividends
	Dividends on ordinary shares:
	Final dividend of 4.70p per share (2015 - 4.40p) paid 17 July 2015	2,141	2,004
	Interim dividend of 4.50p per share (2015- 4.30p) paid 4 January 2016	2,050	1,959

	Dividends paid in the period	4,191	3,963

The proposed final dividend is subject to approval by Shareholders at the Annual General Meeting and 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 £4,996,000 (2015 - £4,321,000).

	2016	2015
	£'000	£'000
Interim dividend for the year ended 31 March 2016 - 4.50p	2,050	1,959
(2015 - 4.30p) paid 4 January 2016
Proposed final dividend for the year ended 31 March 2016 - 6.00p	2,733	2,141
(2015 - 4.70p) payable 15 July 2016
	4,783	4,100

				Investment
			Equities	properties	Total
			£'000	£'000	£'000
9	Investments
	Group
	Cost at 31 March 2015		84,752	38,916	123,668
	Unrealised appreciation		47,381	15,584	62,965

	Valuation at 31 March 2015		132,133	54,500	186,633

	Purchases		4,877	2,878	7,755
	Sales proceeds		(5,079)	(3,382)	(8,461)
	Realised gains/(losses) on sales		1,938	(179)	1,759
	Movement in unrealised appreciation in year		(6,603)	1,308	(5,295)

	Valuation at 31 March 2016		127,266	55,125	182,391


			Investment in	Investment
		Equities	Subsidiary	properties	Total
		£'000	£'000	£'000	£'000
	Company
	Cost at 31 March 2015	84,752	200	47,245	132,197
	Unrealised appreciation	47,381	-	7,255	54,636

	Valuation at 31 March 2015	132,133	200	54,500	186,833

	Purchases	4,877	-	2,878	7,755
	Sales proceeds	(5,079)	-	(3,382)	(8,461)
	Realised gains/(losses) on sales	1,938	-	(179)	1,759
	Movement in unrealised appreciation in year	(6,603)	-	1,308	(5,295)

	Valuation at 31 March 2016	127,266	200	55,125	182,591

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:-

	2016	2015
	£'000	£'000
Purchases	32	69
Sales	4	24
	36	93

The fair values of the investment properties were established by professional valuation on an open market basis for existing use by Savills (UK) Limited, Chartered Surveyors. These valuations were carried out in accordance with the RICS Valuation - Professional Standards 9th edition (as updated) effective from January 2014 (published by the Royal Institute of Chartered Surveyors) by reference to the Investment Method whereby the net annual income derived from a property is capitalised by an appropriate capitalisation rate or Years' Purchase figure to arrive at the present Capital Value of the property after an allowance for the purchaser's costs. The relevant capitalisation rate is chosen, based on the investment rate of return expected (as derived from comparisons of other similar property investments) for the type of property concerned and taking into consideration such factors as risk, capital appreciation, security of income, ease of sale and management of the property.

Investment in subsidiary

Name

Country of incorporation

Date of

acquisition

% ownership

Principal activity

Value and Income Services Limited

16 January 2014

100

AIFM

		2016		2015
		Group	Company	Group	Company
		£'000	£000	£'000	£'000
10	Other receivables
	Amounts falling due within one year:
	Dividends receivable	644	644	354	354
	Prepayments and accrued income	111	111	271	271

		755	755	625	625

		2016		2015
		Group	Company	Group	Company
		£'000	£'000	£'000	£'000
11	Other payables
	Amounts due to brokers	-	-	1,180	1,180
	Amounts due to OLIM Limited	72	72	215	215
	Amounts due to OLIM Property Limited	27	27	90	90
	Accruals and other creditors	870	870	1,415	1,415
	Value Added Tax payable	183	183	-	-
		1,152	1,152	2,900	2,900

The amounts due to OLIM Limited and OLIM Property Limited comprise the monthly management fee for March 2016, subsequently paid in April 2016.

		2016		2015
		Group	Company	Group	Company
		£'000	£'000	£'000	£'000
12	Non-current liabilities
	Bank loan	5,000	5,000	5,000	5,000
	Balance of costs incurred	(109)	(109)	(111)	(111)
	Add : Debit to income for the year	22	22	2	2
		4,913	4,913	4,891	4,891

	11% First Mortgage Debenture Stock 2021	15,000	15,000	15,000	15,000
	Fair value adjustment	-	3,154	-	3,786
		15,000	18,154	15,000	18,786

	9.375% Debenture Stock 2026	20,000	20,000	20,000	20,000
	Add:- Balance of premium less issue expenses	278	278	301	301
	Less : Credit to income for the year	(24)	(24)	(23)	(23)
		20,254	20,254	20,278	20,278

		40,167	43,321	40,169	43,955

The Company has an agreement with Santander UK plc to provide a fixed term loan facility for up to £5,000,000 for a period of up to five years to 27 February 2020 (2015 - £5,000,000). At 31 March 2016, £3,000,000 was drawn down at a rate of 3.644% and £2,000,000 was drawn down at a rate of 3.44%. The terms of the loan facility contain financial covenants that require VIT 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 to Santander UK plc (The Bishop's Finger, 13 Dunstan Street, Canterbury; The Castle, 7 Little Park Street, Coventry; 80/82 High Street, Godalming, Surrey; The Prince of Wales, 48 Cleaver Square, London; and 79 High Street, Lymington).

The 11% First Mortgage Debenture Stock 2021, previously issued by Audax Properties plc, was, on 28 March 2014, transferred to Value and Income Trust PLC (VIT) following the approval of the substitution of VIT as issuer of the Debentures by the holders on 11 March 2014. Applications were made to the UK Listing Authority and the London Stock Exchange for the Debentures to be admitted in the name of VIT to the Official List and to trading on the main market of the London Stock Exchange from 28 March 2014.

The 11% First Mortgage Debenture Stock 2021, now issued by VIT, is repayable at par on 31 March 2021 and is secured over specific assets of the Company. Under IAS 39, this debenture required to be recorded initially at fair value of £19,417,000, rather than its nominal value of £15,000,000 in the Company's financial statements. The amortised cost of the debenture as at 31 March 2016 was £18,154,000 (2015 - £18,786,000). The amortisation of the fair value adjustment is presented as a capital item within gains/losses on investments as it relates to the reversal of a previously recognised loss on the Company's investment in its subsidiary. In the Group financial statements, the fair value adjustment is eliminated on consolidation.

The Trust Deed of the 11% Debenture Stock contains four covenants with which the Company has complied.

Firstly, the value of the assets should not be less than one and one-half times the amount of the Debenture Stock; secondly, the rental income from the assets should not be less than one and one-half times the annual interest of the Debenture Stock (£1.65 million); thirdly, not more than 20 per cent. of the total value of the assets should be attributable to a single property; and finally, not more than 10 per cent. of the assets should be attributable to leaseholds having an unexpired term of less than 50 years.

The 9.375% Debenture Stock 2026 issued by VIT is repayable at par on 30 November 2026 and is secured by a floating charge over the property and assets of the Company.

The Trust Deed of the 9.375% Debenture Stock contains restrictions and events of default. The restrictions require that the aggregate group borrowings, £40 million, must not at any time exceed the total group capital and reserves (equivalent to net assets of £145.31 million as at 31 March 2016).

The fair values of the loan and the debentures are disclosed in Note 20 and the net asset value per share, calculated with the debentures at fair value, is disclosed in Note 17.

13 Deferred tax

Under IAS 12, provision must be made for any potential tax liability on revaluation surpluses. As an investment trust, the Company does not incur capital gains tax and no provision for deferred tax is therefore required.

		2016	2015
		£'000	£'000
14	Share capital
	Authorised:
	56,000,000 ordinary shares of 10p each (2015 - 56,000,000)	5,600	5,600

	Called up, issued and fully paid:
	45,549,975 ordinary shares of 10p each (2015 - 45,549,975)	4,555	4,555

		2016		2015
		Group	Company	Group	Company
		£'000	£'000	£'000	£'000
15	Share premium
	Opening balance	18,446	18,446	18,446	18,446

		2016		2015
		Group	Company	Group	Company
		£'000	£'000	£'000	£'000
16	Retained earnings
	Opening balance at 31 March 2015	125,881	122,095	125,256	120,839
	Profit for the period	617	1,249	4,588	5,219
	Dividends paid (see note 8)	(4,191)	(4,191)	(3,963)	(3,963)

	Closing balance at 31 March 2016	122,307	119,153	125,881	122,095

The table below shows the movement in retained earnings analysed between revenue (distributable) and capital items.

		2016			2015
	Revenue	Capital	Total	Revenue	Capital	Total
	£000	£000	£000	£000	£000	£000
Group
Opening balance at 31 March 2015	4,087	121,794	125,881	3,732	121,524	125,256
Profit for the period	4,996	(4,379)	617	4,318	270	4,588
Dividends paid (see note 8)	(4,191)	-	(4,191)	(3,963)	-	(3,963)

Closing balance at 31 March 2016	4,892	117,415	122,307	4,087	121,794	125,881

Company
Opening balance at 31 March 2015	2,901	119,194	122,095	2,543	118,296	120,839
Profit for the period	4,996	(3,747)	1,249	4,321	898	5,219
Dividends paid (see note 8)	(4,191)	-	(4,191)	(3,963)	-	(3,963)

Closing balance at 31 March 2016	3,706	115,447	119,153	2,901	119,194	122,095

17 Net asset value per equity share

The net asset value per ordinary share is based on the Group's net assets attributable of £145,308,000 (2015 - £148,882,000) and on 45,549,975 (2015 - 45,549,975) ordinary shares in issue at the year end.

The net asset value per ordinary share, based on the net assets of the Group adjusted for borrowings at fair value (see note 20) is 299.17p (2015 - 299.53p)

		2016		2015
		Group	Company	Group	Company
		£000	£000	£000	£000
18	Reconciliation of income from operations before tax to net cash inflow from operating activities
	Income from operations before tax	6,300	6,932	10,280	10,908
	Gains and losses on investments	3,536	2,904	(1,423)	(2,051)
	Foreign exchange movements	-	-	(3)	(3)
	Investment management fee	(1,204)	(1,204)	(1,516)	(1,516)
	Other operating expenses	(777)	(777)	(660)	(657)
	Increase/(decrease) in receivables	(130)	(130)	59	(185)
	Decrease/increase) in other payables	(572)	(572)	(426)	23

	Net cash from operating activities	7,153	7,153	6,311	6,519

19 Relationship with the Investment Manager and other Related Parties

Angela Lascelles is a director of OLIM Limited which has an agreement with the Company to provide investment management services, the terms of which are outlined in the Directors' Report and in Note 3.

Matthew Oakeshott is a director of OLIM Property Limited which has an agreement with the Company to provide investment property management services, the terms of which are outlined in the Directors' Report and in Note 3.

Value and Income Services Limited is a wholly owned subsidiary of Value and Income Trust PLC and all costs and expenses are borne by Value and Income Trust PLC. Value and Income Services Limited has not traded during the year.

20 Financial instruments and investment property risks

Risk management

The Group's and the Company's financial instruments and investment property comprise securities, property and other investments, cash balances, loans and debtors and creditors that arise directly from its operations; for example, in respect of sales and purchases awaiting settlement or debtors for accrued income.

The Managers have dedicated investment management processes which ensures that the Investment Policy is achieved. For equities, stock selection procedures are in place based on active portfolio management and the identification of stocks. The portfolio is reviewed on a periodic basis by a senior investment manager and also by OLIM's Investment Committee.

Additionally, the Managers' Compliance Officers continually monitor the Group's investment and borrowing powers and report to their respective Manager's Risk Management Committee.

The main risks that the Group faces from its financial instruments are:

(i) market risk (comprising price risk, interest rate risk and currency risk)

(ii) liquidity risk

(iii) credit risk

The Board regularly reviews and agrees policies for managing each of these risks. The Managers' policies for managing these risks are summarised below and have been applied throughout the year.

(i) Market 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 2016 would have increased/decreased by £18,239,000 (2015 - increase/decrease of £18,663,000) 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 debenture stock and five 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 40%. Details of borrowings at 31 March 2016 are shown in note 12.

Interest risk profile

The interest rate risk profile of the portfolio of financial assets and liabilities at the balance sheet date was as follows:

At 31 March 2016	Weighted average period for which rate is fixed Years	Weighted average interest rate %	Fixed rate £'000	Floating rate £'000
Assets
Sterling	-	-	-	3,481

Total assets	-	-	-	3,481
At 31 March 2016	Weighted average period for which rate is fixed Years	Weighted average interest rate %	Fixed rate £'000	Floating rate £'000
Liabilities
Sterling	7.7	9.26	40,000	-

Total liabilities	7.7	9.26	40,000	-
At 31 March 2015	Weighted average period for which rate is fixed Years	Weighted average interest rate %	Fixed rate £'000	Floating rate £'000
Assets
Sterling	-	-	-	4,693

Total assets	-	-	-	4,693
At 31 March 2015	Weighted average period for which rate is fixed Years	Weighted average interest rate %	Fixed rate £'000	Floating rate £'000
Liabilities
Sterling	8.7	9.26	40,000	-

Total liabilities	8.7	9.26	40,000	-

The weighted average interest rate on borrowings is based on the interest rate payable, weighted by the total value of the loans. The maturity dates of the Group's loans are shown in Note 12.

The floating rate assets consist of cash deposits on call earning interest at prevailing market rates. The Group's equity and property portfolios and short term receivables and payables are non interest bearing and have been excluded from the above tables. All financial liabilities are measured at amortised cost.

Interest rate sensitivity

The sensitivity analyses below have been determined based on the exposure to interest rates at the balance sheet 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 2016 would increase/decrease by £47,000 (2015 - increase / decrease by £33,000). This is mainly attributable the Group's exposure to interest rates on its floating rate cash balances.

- the Group holds no financial instruments that will have an equity reserve impact.

In the opinion of the Directors, the above sensitivity analyses are not representative of the year as a whole, since the level of exposure changes frequently as part of the interest rate risk management process used to meet the Group's objectives.

Currency risk

Currency sensitivity

There is no sensitivity analysis included as the Group has no outstanding foreign currency denominated monetary items. Where the Group's equity investments (which are non-monetary items) are affected, they have been included within the other price risk sensitivity analysis so as to show the overall level of exposure.

(ii) Liquidity risk

This is the risk that the Group will encounter difficulty in meeting obligations associated with its financial liabilities.

The Group's assets comprise of readily realisable securities which can be sold to meet commitments if required and investment properties which, by their nature, are less readily realisable. The maturity of the Group's existing borrowings is set out in the interest risk profile section of this note.

The table below details the Group's remaining contractual maturity for its financial liabilities, based on the undiscounted cash outflows, including both interest and principal cash flows, and on the earliest date upon which the Group can be required to make payment.

	Carrying value	Expected cashflows	Due within 3 months	Due between 3 months and 1 year	Due after 1 year
Borrowings	40,640	69,587	980	2,722	65,885
Other payables	432	432	432	-	-
Total	41,072	70,019	1,412	2,722	65,885

(iii) Credit risk

This is the failure of a counterparty to a transaction to discharge its obligations under that transaction that could result in the Group suffering a loss.

The risk is not significant and is managed as follows:

- investment transactions are carried out with a large number of brokers, whose credit standing is reviewed periodically by OLIM and limits are set on the amount that may be due from any one broker.

- the risk of counterparty exposure due to failed trades causing a loss to the Group is mitigated by the review of failed trade reports on a daily basis. In addition, a stock reconciliation to third party administrators' records is performed on a daily basis to ensure that discrepancies are picked up on a timely basis. OLIM's Compliance Officer carries out periodic reviews of the Custodian's operations and reports its findings to the OLIM's and VIS' Risk Management Committees. This review will also include checks on the maintenance and security of investments held.

- cash is held only with reputable banks with high quality external credit ratings which are monitored on a regular basis.

None of the Group's assets is secured by collateral or other credit enhancements.

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 and at 31 March was as follows:

	2016		2015
	Balance Sheet £'000	Maximum exposure during the year £'000	Balance Sheet £'000	Maximum exposure during the year £'000
Current assets
Cash and cash equivalents	3,481	6,428	4,693	5,593
Other receivables	755	1,191	625	1,013
	4,236	7,619	5,318	6,606

(iv) Property risk

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 is xx years (2015 - 13 1/2 years). Details of the tenant and geographical spread of the portfolio and the long term record of performance through the varying property cycles since 1987 are set out in the property section of the Investment Managers' Report. OLIM Property is responsible for property investment management, with surveyors, solicitors and managing agents acting on the portfolio under OLIM Property's supervision.

The group leases out its investment property to its tenants under operating leases. At 31 March, the future minimum lease receipts under non-cancellable leases are as follows:-

	2016	2015
	£'000	£'000
Due within 1 year	39	81
Due between 2 and 5 years	3,286	3,667
Due after more than 5 years	47,531	49,122
	50,856	52,870

This amount comprises the total contracted rent receivable as at 31 March 2016.

None of the Group's financial assets is past due or impaired.

Fair values of financial assets and financial liabilities

All assets and liabilities of the Group other than receivables and payables and the borrowings are included in the balance sheet at fair value.

(i) Fair value hierarchy disclosures

The table below sets out fair value measurements using the IFRS 13 Fair Value hierarchy:-

	Level 1	Level 2	Level 3	Total
	£000	£000	£000	£000
At 31 March 2016
Equity investments	127,266	-	-	127,266
Investment properties	-	55,125	-	55,125
	127,266	55,125	-	182,391

At 31 March 2015
Equity investments	132,133	-	-	132,133
Investment properties	-	54,500	-	54,500
	132,133	54,500	-	186,633

Categorisation within the hierarchy has been determined on the basis of the lowest level input that is significant to the fair value measurement of the relevant asset as follows:-

Level 1 - valued using quoted prices in an active market for identical assets

Level 2 - valued by reference to valuation techniques using observable inputs other than quoted prices

Level 3 - valued by reference to valuation techniques using inputs that are not based on observable market data

There were no transfers between levels during the year.

(ii) Borrowings

The fair value of borrowings has been calculated at £52,190,000 as at 31 March 2016 (2015 - £52,445,000) compared to a balance sheet value in the financial statements of £40,167,000 (2015 - £40,169,000) per note 12.

The fair values of the debentures are determined by comparison with the fair values of equivalent gilt edged securities, discounted to reflect the differing levels of credit worthiness of the borrowers. The fair value of the loan is determined by a discounted cash flow calculation based on the appropriate inter-bank rate plus the margin per the loan agreement. All other assets and liabilities of the Group are included in the balance sheet at fair value.

	Fair Value		Balance Sheet Value
	2016	2015	2016	2015
	£'000	£'000	£'000	£'000

11% First Mortgage Debenture Stock 2021	19,463	19,874	15,000	15,000
9.375% Debenture Stock 2026	27,567	27,483	20,254	20,278
	47,030	47,357	32,254	35,278

Bank Loan	5,160	5,088	4,913	4,891

	52,190	52,445	40,167	40,169

21 Capital management policies and procedures

The Group's capital management objectives are:

- to ensure that the Group will be able to continue as a going concern;

- to maximise the return to its equity shareholders in the form of long term real growth in dividends and capital value without undue risk through the optimisation of the debt and equity balance.

The capital of the Group consists of equity, comprising issued capital, reserves 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 Managers' views on 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.

22 Events after the Balance Sheet Date

The following property transactions are scheduled to complete after 31 March 2016:-

Purchases

23-25 Midland Road, Bedford (completed 9 May 2016)

The Tramway, 167-169 Victoria Road West, Thornton-Cleveleys (completed 3 May 2016)

Sales

138-140 High Street, Ayr (completion scheduled for 14 June 2016)

261 Brook Street, Broughty Ferry, Dundee (completed 27 April 2016)

88 Cheap Street, Sherborne (completed 29 April 2016)

17-18 High Street, Stratford-upon-Avon-Upper parts (completed 7 April 2016)

29 High Street, Stratford-upon-Avon-Upper parts (completed 29 April 2016)

Non-current liabilities

On 26 February 2015, a five year secured term loan facility of £5m was arranged with Santander UK Plc at a five year interest rate of 4% p.a including all costs. This loan was refinanced in May 2016 and a new ten year secured term loan facility of £15m was arranged with Santander UK Plc at a ten year interest rate of 4.5% p.a. including all costs to replace the original £5m loan arranged in February 2015. Of the £15m, £11,893,750 was drawn down on 13 May 2016.

Additional Information

In accordance with section 435 of the Companies Act 2006, the Directors advise that the financial information set out in this announcement does not constitute the Group's statutory financial statements for the period ended 31 March 2016, but is derived from these financial statements. The financial statements for the period ended 31 March 2016 have been prepared in accordance with International Financial Reporting Standards as adopted by the European Union. The financial statements for the period ended 31 March 2016 will be forwarded to the Registrar of Companies following the Company's Annual General Meeting. The Auditors have reported on these financial statements; their reports were unqualified and did not contain statements under Section 498(2) or (3) of the Companies Act 2006.

The Group and Company Statement of Financial Position at 31 March 2016 and the Group and Company Statement of Comprehensive Income, Statement of Changes in Equity and Statement of Cashflows for the year then ended have been extracted from the Group's Financial Statements. Those Financial Statements have not yet been delivered to the Registrar.

The 2016 Annual Report and Financial Statements will be posted to Shareholders shortly and will contain the Notice of the Annual General Meeting of the Company to be held on Friday 8 July 2016 at 12.30pm at the offices of Shepherd & Wedderburn LLP, 1 Exchange Crescent, Edinburgh EH3 8UL.

For Value and Income Trust PLC

Maven Capital Partners UK LLP

Company Secretary

2 June 2016

This information is provided by RNS

The company news service from the London Stock Exchange

END

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