VALUE AND INDEXED PROPERTY INCOME TRUST PLC – VIP

ANNUAL REPORT AND ACCOUNTS 2022

LONG, STRONG, INDEXED PROPERTY INCOME

Value and Indexed Property Income Trust PLC (VIP) is an investment trust company

listed on the London Stock Exchange. It now invests mainly in direct UK commercial

property, with under 15% in UK property-backed securities, to deliver secure,

long-term, index-related income. Its performance benchmark changed on 1 April

2021 from the FTSE All Share Index to the MSCI UK Quarterly Property Index.

£1,000 invested in Value and Income Trust PLC, now VIP, when OLIM took

over as Managers in 1986 had grown, with dividends reinvested, to £27,395 at

end March 2022. The total return was 9.6% p.a., against 5.3% p.a. for the FTSE

All Share Index, where £1,000 would have grown to £6,546.

VIP’s dividend per share has grown every year and risen by 908% over the

35 years, against the Retail Price Index rise of 222%. The medium term dividend

policy is for increases at least in line with inflation, underpinned by VIP’s index-

related property income.

The VIP Property portfolio delivered a total return of 20.2% over the year

against 19.6% for the MSCI UK Quarterly Property Index, the main benchmark

for commercial property performance.

VIP Property Portfolio Performance Record Over

35 Years TO 31 MARCH 2022

Sector Weightings Since 2012

Offices

0%

0%

0%

0%

0%

Shops and Retail Warehouses

49%

39%

0%

0%

0%

Supermarkets

0%

5%

2%

16%

27%

Pubs & Restaurants

13%

17%

32%

24%

13%

Leisure

10%

11%

12%

8%

11%

Industrial

8%

8%

32%

35%

33%

Roadside

16%

16%

6%

3%

7%

Other

4%

4%

16%

14%

9%

Total

100%

100%

100%

100%

100%

Value and Indexed Property Income Trust PLC Annual Report and Financial Statements 2022

Page

1

Contents

Financial Calendar

29 October 2021

First quarterly dividend of 3.0p per share for the year ended 31 March 2022

12 November 2021

Announcement of Half-Yearly Financial Report for the six months to 30 September 2021

28 January 2022

Second quarterly dividend of 3.0p per share for the year ended 31 March 2022

29 April 2022

Third quarterly dividend of 3.0p per share for the year ended 31 March 2022

10 June 2022

Announcement of Annual Financial Report for the year ended 31 March 2022

8 July 2022

Annual General Meeting, Edinburgh (12.30pm)

29 July 2022

Final dividend of 3.6p per share payable for the year ended 31 March 2022

28 October 2022

First quarterly dividend payable for the year ending 31 March 2023

November 2022

Announcement of Half-Yearly Financial Report for the six months ending 30 September 2022

27 January 2023

Second quarterly dividend payable for the year ending 31 March 2023

Strategic Report

Chairman’s Statement

2

Property Manager’s Report

4

Equity Manager’s Report

23

Business Review

25

Governance

Directors’ Details

35

Directors’ Report

36

Directors’ Remuneration Report

43

Statement of Corporate Governance

46

Statement of Directors’ Responsibilities

52

Report of the Audit and Management Engagement Committee

54

Independent Auditor’s Report

58

Financial Statements

Group Statement of Comprehensive Income

66

Company Statement of Comprehensive Income

67

Group Statement of Financial Position

68

Company Statement of Financial Position

69

Group Statement of Cashflows

70

Company Statement of Cashflows

71

Statement of Changes in Equity

72

Notes to the Financial Statements

73

Additional Information

Alternative Investment Fund Managers Directive

96

How to Invest in Value and Indexed Property Income Trust PLC

98

Unsolicited Offers for Shares (Boiler Room Scams)

99

Glossary

100

Notice of Annual General Meeting

101

Contact Information

107

Value and Indexed Property Income Trust PLC Annual Report and Financial Statements 2022

Page

2

Chairman’s Statement

You will see from the Manager’s Report that

VIP has been successful in continuing with its

plan, that I wrote about last year, to establish

a portfolio of properties on long leases with

inflation linked rent reviews. This has involved

greater investment activity than usual, but

the re-arrangement of our portfolio has now

broadly been completed. Since VIP’s year end,

we have borrowed an additional £8 million

from an existing lender. The net decrease

in cash is due to the purchase of additional

properties, in line with the Company’s

investment policy.

Many of the Company’s index-linked leases

provide for maximum and minimum increases

at future rent review, often described as ‘caps

and collars’. The details of these are shown

in Note 9 to the Financial Statements on

pages 82 to 84. The Financial Statements

have been prepared under IFRS (International

Financial Reporting Standards) and IFRS 16

requires that these minimum rent increases,

which may arise only many years in the

future, are averaged over the whole life of the

lease. As detailed in Note 10 to the Financial

Statements on page 84, an increase in amounts

due from brokers this year has arisen due

to the sale of an investment in the quoted

portfolio which straddled the year end and the

cash was received in full two days later.

The Board is recommending a final dividend

of 3.6p per share making total dividends of

12.6p per share for the year to 31 March

2022, compared to 12.3p per share in the

previous year, an increase of 2.4%. Subject to

Shareholder approval at the Annual General

Meeting (AGM), the final dividend will be

paid on 29 July 2022 to Shareholders on

the register on 1 July 2022. The ex-dividend

date is 30 June 2022. It will be the 35

th

year of dividend increases following the

reconstruction of the Company. In the short

term this will require some use of our capital

reserves.

In the medium term, however, the

Board will aim to ensure that the dividend is

paid from rents and dividends received (after

interest costs and management expenses) and

that the indexed leases permit future increases

in line with inflation.

Net Asset Value total return (with debt at par)

and Share Price total return are considered

by the Board to be Alternative Performance

Measures (APMs) as explained further in

the Business Review on pages 31 to 32 and

defined in the Glossary on page 100. Over

the year, the Net Asset Value total return

(with debt at par) was 15.6% (2021: 12.3%)

and the Share Price total return was 15.8%

(2021: 39.3%). This compares with the

FTSE All-Share Index total return of 13.0%

(2021: 26.7%). The total return from the

property portfolio was 20.2% (2021: 2.3%)

(the MSCI UK Quarterly Property Index

total returns were 19.6% (2021: 0.9%)) and

from the equity portfolio was 24.1% (2021:

26.6%). From 1 April 2021, our performance

comparator was changed from the FTSE

All-Share Index to the MSCI UK Quarterly

Property Index to reflect the change in our

investment policy.

As provided in the Circular issued to

Shareholders in December 2020, there will be an

opportunity in the future for Shareholders who

wish to sell their shares to do so at Net Asset

Value less costs. The Board’s intention is to table

a proposal at the AGM to be held in 2026.

As noted in previous statements, the difference

between the fair value and the nominal value

of our Debenture Stock and our secured loans

is reducing over the life of the Debenture,

which would be repaid at its nominal (par)

value. The figures are set out in Note 17 to the

Financial Statements on pages 87 and 88. We

announced on 24 May 2022 that we intend to

repay this Debenture early to reduce interest

costs and provide greater flexibility in the

management of our portfolio.

This years’ AGM will be held in the offices

of Shepherd & Wedderburn LLP, 1 Exchange

Crescent, Conference Square, Edinburgh

EH3 8UL on Friday, 8 July 2022 at 12.30pm.

The Notice of Annual General Meeting

can be found on pages 101 to 106 of this

Annual Report. The Board encourages

Shareholders to vote using the Proxy Form,

which can be submitted to Computershare, the

Company’s Registrar. Proxy Forms should be

completed and returned in accordance with

Chairman’s Statement

Value and Indexed Property Income Trust PLC Annual Report and Financial Statements 2022

Page

3

the instructions thereon and the latest time

for the receipt of Proxy Forms is 12.30pm

on Wednesday, 6 July 2022. Proxy votes

can also be submitted by CREST or online

using the Registrar’s Share Portal Service at

www.investorcentre.co.uk/eproxy

.

I announced last year that I intended to retire

during the course of 2022 and, accordingly,

I shall be retiring after the AGM and John

Kay will become Chairman. Over the years,

I have appreciated greatly the support of

my colleagues on the Board, and also the

professionalism and attention to detail of our

Managers and Secretaries.

The outlook for markets is dominated at

present by the major uncertainties of inflation

and Ukraine. However, property with long

term, inflation-related leases offers good value

in these circumstances.

Contracted % of Indexed Income

39%

2013

2017

2019

52%

79%

2020

2021

2022

86%

91%

96%

James Ferguson

Chairman

10 June 2022

Summary of Portfolio

Value and Indexed Property Income Trust PLC Annual Report and Financial Statements 2022

Page

4

Property Manager’s Report

Matthew Oakeshott and Louise Cleary

Uk Commercial

Property – Average

Annual % Growth Rates

To March 2022

Capital Values

+14.8

+17.9 +14.9

+1.9

+2.2

+3.3

Rental Values

+4.6

+4.6

+3.1

-0.3

+0.3

+1.2

Total Returns

+18.8

+22.2 +19.6

+6.4

+6.7

+8.3

Source: MSCI UK Quarterly Property Index – Annualised

These returns to the end of March are higher than

the calendar year figures quoted above because

capital value growth accelerated through 2021

after a dull first quarter.

Property Portfolio

The Market

The MSCI UK Quarterly Property Index, the

most representative measure of the performance

of institutional investment property portfolios,

showed a total return of 16.3% over 2021, with

capital growth of 11.5%. Estimated rental values

were up overall by 1.8%, with retail 3% down

on average, offices and alternatives virtually

level and industrial property up 9%. Differential

movements in capital values were more dramatic,

with industrial property up by no less than 31%,

retail and alternative sector properties up on

average by 3%-4% and offices flat. For 2021 as

a whole, total returns, taking capital and income

together, for industrial/warehouse property

averaged 36%, with retail and alternatives

averaging 8%-10% and offices only 5%. 2021

was the first year since 2009 when retail property

in the UK outperformed offices. There will be

many more as the office sector remains locked in

long term structural decline.

Total returns will be lower but still satisfactory

over 2022 as a whole. They may be around

12% overall, with returns for industrials, retail

and the alternative sectors all in the early teens

but offices only around 5% with capital values

flat, rents under pressure and voids through the

roof. Property’s real returns will be far lower,

with the RPI already up 9% year on year. It

will stay higher for longer than the Bank of

England or the market expects. Stagflation is

here to stay for at least as long as the war in

Ukraine drags on.

Comparative Investment Yields – End December

(Except end March 2022)

Source: MSCI UK Quarterly Property Index and ONS for the RPI (*to December except March 2022)

Value and Indexed Property Income Trust PLC Annual Report and Financial Statements 2022

Page

5

Property Manager’s Report

Property transaction volumes and market

liquidity improved markedly through

2021 with an estimated total turnover of

£65 billion, higher than in 2019 pre-pandemic

and above the long term averages. This trend

has continued so far in 2022. Industrial

property volumes were strongest but activity

increased in previously quiet sectors,

especially leisure, hotels and retail, with

relentless demand for retail warehouses

and supermarkets supplemented recently by

buyers of in town retail at high yields. Prime,

especially long-let offices were active but the

market for older secondary offices is getting

worse, with some now virtually unlettable

and unsaleable where they do not meet

environmental standards. There is a growing

“brown discount” for properties in all sectors

with non-compliant Energy Performance

Certificates (EPCs).

Property void rates rose from 8.2% at the

start of the pandemic in March 2020 to a

peak of 10.2% in June 2021 and remain high

at around 10%. As the table below shows,

industrial and retail void rates have fallen

markedly from their COVID peaks, but office

voids shot up from 13.1% in March 2020 to

19.4% now, well above the previous record

high of 14.8% for office voids in 2013.

0.0

2.0

4.0

6.0

8.0

10.0

12.0

14.0

16.0

18.0

20.0

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

MSCI Monthly Index

Vacancy Rates %

All Property Types

Retail

Office

Industrial

During the COVID crisis, the Government,

under political and tenant pressure, repeatedly

suspended landlords’ traditional tools for

enforcing rent collection – eviction orders,

use of Commercial Rent Arrears Recovery

(CRAR) bailiffs and statutory demands

for winding up. They have also introduced

a fiendishly complicated legal arbitration

procedure for rent arrears run up during

COVID. This will be a bonanza for lawyers

and no real help for landlords and tenants

who should have done a deal long ago.

Apart from that, landlords are able again to

use their normal strong powers to enforce

prompt payment of rent from commercial

property tenants, including the use of

bailiffs where necessary. With all properties

throughout the UK now able to open again

and trade normally, there is no longer any

excuse for strong tenants not to pay their rent

promptly and in full; rent collection rates

should, therefore, now be back to normal

on all professionally managed institutional

property portfolios.

Value and Indexed Property Income Trust PLC Annual Report and Financial Statements 2022

Page

6

Property Manager’s Report

Property Prospects by

Sector

Warehouse/Industrials –

an Overheated Market –

Yields have Fallen Far

Enough

Warehouse and industrial property delivered

most of commercial property’s total capital

growth in 2021 for the right reasons, with

voracious demand, mainly from food and

online retailers, driving up rents right across

the UK for both “big box” warehouses near

motorways and smaller units on estates nearer

city centres. Valuation yields were forced

down to reflect improving rental growth

prospects, and the outlook for rental growth

remains good, vacancy rates for both “big

box” units and traditional industrial estates

are very low (and now negligible in parts of

the South East, Midlands and East Anglia).

Driven by the explosion of online retailing,

2021 saw the second highest ever take up of

logistics “big boxes” at 34.1 million square

feet, only slightly below the exceptional

performance in 2020 at 35.8 million square

feet and 71% above 2019. 2022 will be

slower.

Over £18 billion was invested across the

industrial/warehouse sector in 2021, nearly

double the 2020 transaction volume and

over 60% above the previous highest annual

level recorded in 2017. But the industrial

property investment market is now running

white hot, too hot in our view, with yields

bid down to unsustainably low levels by

panic buyers, who are having to make wholly

unrealistic rental growth projections to justify

the prices they are paying. Sellers are hard to

find. Rapidly rising interest rates and other

economic pressures have started to cool this

overheated market. The latest UK figures

showed online non-food retail sales down to

39% of the total, against 63% a year ago.

Amazon recorded its first quarterly loss since

2015 at the end of April, the share price fell

16% instantly and has fallen 26% to date.

The share prices of the larger property REITS

focusing on large warehouses followed suit

with Segro -25% and Tritax Big Box -22%.

Rapidly rising costs and supply chain

problems, together with a weakening economy

and consumer confidence, are already putting

pressure on the strong occupiers and may

affect some weaker occupiers more acutely

this year, although industrial property values

will still be supported by the conversion of

older and lower value sites to residential

and other alternative uses, especially in

southern England. Well-located industrial and

warehouse property in all sizes from logistics

“big boxes” on motorway junctions to “last

mile” urban sheds and estates of smaller

units should still outperform offices and

probably the property market as a whole for

the rest of the year. But risks are rising and

selling opportunities should be taken where

valuation yields have fallen too far to generate

satisfactory long-term returns.

Offices – Locked in Long

Term Relative Decline –

the Way we Work has

Changed for Good

Offices have taken over the performance

wooden spoon from retail for the first time

in twelve years and may hold it for the

foreseeable future. Investors’ long overdue

focus on ESG is hitting office values harder

than on most other sectors, because so many

older office buildings, in London in particular,

simply cannot be updated to suitable standards

at realistic cost. Occasional headline-grabbing

investment or letting deals for the very best

space are just a sign of a flight from quantity

to quality, with tenants usually downsizing at

the same time, giving owners of their old space

a hospital pass. There is still some demand for

high quality city centre offices, but for more

limited space for meeting, training and prestige

purposes.

Mid and back-office work is now being

done far more from home, or partly at low

cost non-city centre locations. Unnecessary

offices are one cost that businesses can now

cut, with break clauses exercised in most

cases and tenants demanding considerable

capital expenditure from landlords to renew

leases, even in part. Functional obsolescence

and depreciation will, therefore, need to be

factored more specifically into most office

valuations, keeping capital values under

continuing downward pressure to reflect lower

effective net rents and greater re-letting risk, as

valuers start to reflect this risk properly.

Value and Indexed Property Income Trust PLC Annual Report and Financial Statements 2022

Page

7

Property Manager’s Report

The public sector, the largest UK office tenant,

has clearly now adopted a long-term hybrid

working model, and would have serious HR

and legal problems and additional trade union

pressure if it tried to force any employee back

to the office full-time, despite the Minister

for Government Efficiency publicly applying

pressure. Many UK companies are also

downsizing, going hybrid, closing their head

office altogether and taking temporary space

nearby instead. Those employers such as

some American investment banks or law firms

requiring full office attendance will, therefore,

find staff recruitment and retention ever more

difficult in a climate where talented employees

feel more able to negotiate the way they work,

irrespective of age or sex.

Retail – Bouncing Back,

Led by Retail Warehouses

and Supermarkets

The COVID pandemic hit the high street

hard where it had already been hurting for

many years: first, by getting many more older

shoppers, in particular, used to the range

and convenience of non-food shopping in

particular, online; and second, by making

people switch from public transport or

parking in congested city-centres to easier and

safer car-borne shopping out of town. Retail

warehouse rents are rising again, especially

where well-run operators like B&Q, B&M

and Home Bargains trade alongside the

leading supermarkets, and capital values are

growing rapidly – some institutional investors

missed the market in industrial property, want

no more offices, and have money which they

are struggling to invest.

On the high street, the steepest falls in

property values happened in “prime” central

London and other prime highly valued cities

and towns which are now unaffordable for

both multiple and individual retailers. Unfair

business rates had already crippled urban high

streets in less prosperous parts of the UK,

and the Government’s latest partial attempt

at rates reform will be too little, too late for

many locations. Prosperous suburbs and

market towns with affordable rents and an

attractive mix of convenience and independent

traders have proved more resilient during

the crisis and are generally recovering better

than bigger centres. Transaction volumes are

rising again for high street shops and shopping

centres, and as rental values have been reset

at affordable and sustainable levels, there are

now growing signs of capital growth from the

retail bargain basement.

Supermarkets and convenience stores

(including petrol filling stations), have done

well during COVID, often with increases of

20%-30% in their turnover, part of which

they are able to retain with more people

working on average nearer home. Online food

sales’ market share has slipped back from

16% to 11% now with Sainsbury’s reporting

online sales down from 21% to 15% of their

total. Aldi, Lidl, and their older-established

grocery competitors are fighting fiercely for

stores under 15,000 – 20,000 sq. ft. The

leading supermarkets are also much better at

combining physical and online shopping than

most non-food retailers.

Non-Traditional

Alternatives – Index-Linked

Leases to Strong

Survivors Are Key

Property in the “Alternatives” sector – i.e.

everything except office, industrial or retail -

has been growing rapidly in importance for

institutional investors in recent years and

now accounts for one-sixth of the MSCI UK

Quarterly Property Index. It covers a wide

range of property types and tenants, often

with long, index-linked leases. With the RPI

now rising at an annual rate of 9% and the

CPI at 7%, these index-linked leases hold the

key to sustained outperformance so long as the

individual property rents are well covered by

operating profits and paid by strong multiple

tenants.

COVID with its ever-changing lockdowns

posed a once in a lifetime challenge to

alternative sector operators and investors.

Tenants with strong long-term business

models and short-term crisis management,

working with investors who knew how and

when to give help and improve leases, came

through the COVID challenge stronger

than ever before, with their weaker multiple

competitors, and many private operators,

savagely squeezed or forced out of business

altogether. Alternative investments are,

therefore, outperforming most property

Value and Indexed Property Income Trust PLC Annual Report and Financial Statements 2022

Page

8

Property Manager’s Report

sectors again, and probably even industrials

over 2022, but with strong survivor bias and

variations within and between different sub-

sectors, as outlined below.

Alternatives – Leisure

and Hotels – Strong

Tenants Trading Stronger

than Ever Outside City

Centres

Well-let pubs have proved far safer

investments than restaurants, where many

private-equity backed multiple chains were

already drowning in debt pre-COVID.

The leading pubcos, like Greene King and

Wetherspoons, as well as most traditional

regional brewers, have strong balance sheets

with plenty of freehold assets and borrowing

capacity. Profitable, spacious pubs with

outside space, have been trading exceptionally

well and above pre-pandemic levels over the

past year, apart from central London. Pubs

of this type in suburban, smaller town and

rural locations will stay short and long-term

winners whilst consumer spending on food

and drink remains at current levels.

Hotel values are also well off the bottom.

Modern hotels in prosperous smaller towns

and rural areas, serving British holidaymakers,

workers and businesses, have been performing

really strongly over the past year, proving

resilient even during the latest COVID surge.

They will continue to outperform large

city centre and airport hotels dependent on

international business and travel. Zoom,

Teams and ESG have slashed expensive

corporate frequent flying. Covenant strength

will remain crucial for hotels’ investment

value – for example, a Premier Inn is valued

well above a similar Travelodge, because

long-term investors hate CVAs (Company

“Voluntary” Arrangements). Caravan parks

should also trade very strongly for many years

to come.

Health and Fitness clubs have been rebuilding

their memberships but will be suffering from

the squeeze on real incomes. The leading

brands on large out of town sites, with good

car parking and customers often able to

work from home, offer the best long-term

investments.

The two main ten pin bowling companies,

who dominate the market, are going from

strength to strength and offer a sensibly priced

family treat which cannot be replicated online.

But bingo halls and cinemas face a tougher

future as lockdowns drove away many of

their older customers and the operators are

vulnerable to online competition.

Alternatives – Student

Housing and Care Homes –

Covenant Strength Key

Direct-let investments on long leases to well-

established universities should continue to

perform well but indirect student housing

investments with nomination agreements or

third-party providers, depending more on the

local residential letting market, are less clear

beneficiaries of yield hardening for safe, long-

let property.

COVID has hit care homes hard. Costs and

vacancy rates are rising because of more

deaths, slower admissions and severe Brexit

and vaccination-related staff shortages,

while some private-equity backed care home

providers need more equity and lower rents.

High quality homes with self-funded residents

will continue to outperform those dependent

on squeezed local authority budgets. The

rise in National Insurance contributions has

raised staff costs for care homes, and the

Government’s reforms to social care funding

will not deliver meaningful extra cash for

another three to four years. Medical centres

and private hospitals will stay in demand as

the NHS faces years of non-COVID catch up

and outsourcing more profitable work.

Value and Indexed Property Income Trust PLC Annual Report and Financial Statements 2022

Page

9

Property Manager’s Report

The Economy – an Unhappy 25th Anniversary for Bank

of England Independence

1995 MAR

2000 MAR

2005 MAR

2010 MAR

CPI Annual Rate

2015 MAR

2020 MAR

-2.0

0.0

2.0

4.0

6.0

8.0

Source: ONS

25 years ago Gordon Brown gave the Bank of

England Monetary Policy Committee the power

to set interest rates to meet a stated inflation

target. As the chart above shows, until recently,

their record has been good. Even including

the current inflation tsunami, annual UK CPI

growth over the past quarter of a century has

averaged exactly 2% (with the RPI at 2.8%).

Official interest rates have averaged 2.6%,

compared with 10.4% over the previous 25

years and 8.4% for the RPI (CPI figures are not

available). But success, as so often in business

and government, has bred complacency and

groupthink, reinforced by similar flawed

inflation models in other Western Central

Banks. Massive Quantitative Easing was the

only possible response to the 2008/9 banking

crash, which hit the UK hardest of all the main

Western economies, but the Bank persisted

with the policy far longer and stronger than

was necessary or prudent, leaving Britain in our

present agonizing double bind of unsustainably

low interest rates and high inflation. The Bank

really has no alternative now to raising interest

rates rapidly to stop inflation expectations

taking a real hold, as they did in eerily similar

circumstances in the early 1970’s after the first

oil price shock. Inflation has also rocketed in

the US to 8.3% (a new 40 year high) and 7.4%

in the Eurozone.

The March consumer price figures (CPI + 7.0%

and RPI + 9.0% year on year) clearly show

inflation heading higher over the next few

months, probably into double figures for the

CPI and 12% for the RPI Inflation may still

be around the current rates at the year end.

The latest Producer Price Indices show output

prices up by 11.5% year on year and input

prices up by 19.2%.

So Britain is now suffering stagflation, with

average real incomes likely to fall by at least

2% and maybe up to 3% over 2022 as a result

of increases in tax and National Insurance

combined with average earnings and benefits

lagging far behind price rises. UK domestic

consumer spending was the main engine of UK

economic recovery in 2021, with exceptionally

high pandemic savings being spent by better off

households, and employees gradually returning

to work. That will not be repeated in 2022, and

forecasts, like the OBR’s in March, for UK GDP

to grow by 3.8% this year now look far too

high. A technical recession may well be looming

later this year on a quarter by quarter basis. Q1

2022 may be only just up, with Q2, Q3, Q4 all

down. Although GDP figures are often subject

to major subsequent revisions. Any progress

later in 2023 will be critically dependent on

progress towards peace in Ukraine and easing

disruption to international trade, not least with

Value and Indexed Property Income Trust PLC Annual Report and Financial Statements 2022

Page

10

Property Manager’s Report

China, and supply shortages around the world.

There is still a danger of renewed outbreaks of

COVID, especially in less developed countries

where vaccination rates are very low. Food

and energy shortages, serious as they feel in

richer countries like the UK, could actually

kill millions especially in Africa, if the war in

Ukraine and disruption of world trade drag on.

Conclusion – Index-Linked

Income Still Seriously

Undervalued

UK commercial property values stabilised in

late 2020 and have since been rising rapidly.

Industrials have been by far the star performers,

but their yield re-rating must be over as

prices are clearly overheating especially at

the prime end of the market. Offices’ relative

performance is going from bad to worse.

Retail values started to recover early in 2021,

as gains for retail warehouses, supermarkets

and convenience stores offset slowing rates

of decline in shopping centres and high street

shops, which have now finally bottomed out.

The alternative sectors have also bounced back

strongly with pubs, hotels, bowling and caravan

parks booming, especially outside London.

Healthcare and nursing home investments will

stay in demand despite their staffing problems.

2022 may see a similar pattern of relative

property performance, despite current short

term interest rate rises, and possibly sharp

increases in current unsustainably low long

term bond yields, with alternatives, retail and

industrials leading the way and offices bringing

up the rear.

The COVID crisis has taught UK property

investors a stark lesson: stay on the right side

of structural change, avoid offices, and stick

wherever you can to properties let to strong

tenants at affordable rents on long, preferably

index-linked, leases. Safe, long-term indexed

income will be even more highly prized as

inflation rises faster for longer than myopic

markets and complacent central bankers expect.

Wars are always inflationary, and however long

the hot war lasts in Ukraine, the West is clearly

now in an economic cold war with Russia and

its allies, with sanctions and shortages biting for

years to come.

Secure, index-linked, UK property offers

massive yield margins over index-linked

gilts, and a comfortable yield cushion still

over conventional bonds. It is still seriously

undervalued.

Forecast Average Annual Rental

Income Growth* % over Five Years

2.0%

CPI 0%

CPI 2%

CPI 4%

3.3%

4.0%

CPI 6%

CPI 8%

CPI 10%

4.4%

4.8%

5.2

%

*Annual rental growth assuming CPI increases 0% - 10% P.A.

Value and Indexed Property Income Trust PLC Annual Report and Financial Statements 2022

Page

11

Property Manager’s Report

Portfolio Summary

VIP specialises in UK commercial properties with long, strong, index-related income streams to

deliver above average long term real returns.

Portfolio Value:

£155,478,000*

£110,050,000

£80,550,000

Contracted Income:

£8,339,944

£6,336,645

£5,151,786

Contracted income as a % of Portfolio Value:

5.4%

5.8%

6.4%

Total Number of Properties:

43

39

31

Total Number of Tenants (the Portfolio is 100% let):

43

40

32

Contracted Indexed Rent:

95.8%

92.4%

90.6%

Weighted Average Unexpired Lease Term

(if all tenants exercise break options):

12.8 years

13.8 years

15.1 years

Annual Total Return March to March:

20.2%

(MSCI:19.6%)

-

2.3%

(MSCI: 0.9%)

*Savills Valuation – NB: This figure does not include £6m committed to complete the Alnwick Hotel Development. The fair valuation given by

Savills excludes prepaid or accrued operating lease income arising from the spreading of lease incentives or minimum lease payments and for

adjustments to recognise finance lease liabilities for one leasehold property, both in accordance with IFRS 16. For further information see Note 9

to the Financial Statements on pages 82 to 84.

Performance and Independent Revaluation

Savills’ independent valuation at 31 March 2022 on the direct commercial property portfolio

increased to £155,478,000 with a running yield of 5.4% (from 5.7% as at end-December 2021).

This is up from the half-yearly valuation at 30 September 2021 of £110,050,000, the increase

driven by both net acquisitions and valuation uplift.

VIP’s property portfolio produced a total return on all 43 properties of 20.2% over the past year

to March, against 19.6% for the MSCI UK Quarterly Property Index, the main benchmark for

commercial property performance. Properties held throughout had a total return of 23.5%, the

difference reflecting the acquisition costs on 14 properties bought during the year.

VIP’s property portfolio total returns on All Assets of 20.2% over the past year and 8.8% over

the past six months were driven by a valuation uplift of 8.5% on the 38 properties held over the

six months (leisure 16.1%, industrials 12.4%, supermarkets 8.1%, other 7.1%, hotels 5.4%,

pubs 4.1% and roadside 2.0%).

The longer term returns on the property portfolio have been between 10% and 12% a year over 3,

5, 10 and 20 years and 35 years and are above the MSCI averages over all these periods. The real

Value and Indexed Property Income Trust PLC Annual Report and Financial Statements 2022

Page

12

Property Manager’s Report

returns above the Retail Price Index from VIP’s property portfolio were 10% last year and between

5% and 9% a year over all cumulative periods from 3 to 35 years since the inception of OLIM

Property’s management.

Contracted rental income rose by 6% on held properties. The average lot size is £3,600,000,

ranging from £1,150,000 to £13,000,000.

Properties

All 43 properties are let and 100% occupied on full repairing and insuring leases (tenants are responsible

for repair, maintenance and outgoings), plus there is an agreement for lease in place at Alnwick where a

Premier Inn hotel (80 bedrooms plus hotel) is currently under construction with completion due summer

2022. All 43 tenancies have upwards only rent increases and a weighted average unexpired length of

12.8 years (19.8 years if the break options are not exercised). All the properties valued at 31 March

2022 are freehold with the exception of two which are long leasehold with 109 and 83 years to run

(Doncaster and Fareham).

Purchases to 31 March 2022

Fourteen new properties were purchased over the year for £63,430,000 in total including costs,

at an average net initial yield of 5.3% (plus there will be an additional £6,000,000 to be paid on

practical completion during late summer of 2022 of the Premier Inn Hotel at Alnwick, which is

currently under construction); their average weighted unexpired lease length at 31 March 2022 is

10.4 years (if the break options are exercised). The newly purchased freehold properties consist of

two hotels (one under construction), six industrials, three petrol filling stations with convenience

stores and three supermarkets. Seven of the properties have RPI-linked rent increases, four have

CPI-linked rent increases and three with fixed increases.

Purchases and sales since march 2019

2019/2020

£10,800,000

5

£9,200,000

5

2020/2021

£17,600,000

7

£4,750,000

2

2021/2022

£63,430,000

14

£3,260,000

2

Total

£91,830,000

26

£17,210,000

9

Purchase Pipeline

Further properties with long, strong, index-linked income are under active investigation.

Sales to 31 March 2022

The sale of two short-let overrented properties completed during the year: a petrol filling station in

Southampton and a pub in Thornton Cleveleys for a combined £3.3m, 4.9% above valuation and

at a net sale yield of 8.8%.

Sales since 31 March 2022

Since the year end, two properties have completed: a Buzz Bingo in Bradford and a Co-op store in

Barton upon Humber for a combined £3.3m in total (39.5% above valuation) at a net sale yield

of 6.2%.

Value and Indexed Property Income Trust PLC Annual Report and Financial Statements 2022

Page

13

Property Manager’s Report

Rent Reviews

The portfolio now has 96% of contracted income (42 out of 43 tenancies) with index-linked or

fixed rent increases. Only one property, the industrial at Fareham, has three yearly open market

upwards only reviews (the December 2021 sweep up clause has since been agreed with a 4%

uplift and is to be documented imminently).

Nineteen rent reviews completed over the course of the year (twelve with annual rent increases

and seven with five yearly review patterns), sixteen RPI-linked rent increases and three with

fixed rental increases: 7 pubs, 5 supermarkets, 2 petrol filling stations, 1 bingo hall, 1 bowling

alley, 1 library, a driving test centre and the caravan park giving a combined 6.9% uplift on their

passing rents.

PROPERTY PORTFOLIO INDEXED RENT

REVIEWS - 96% OF CONTRACTED RENT

Retail Price Index - 68% (31 Tenancies)

Consumer Price Index - 8% (5 Tenancies)

Fixed Increases - 20% (6 Tenancies)

Open Market - 4% (1 Tenancy)

68%

20%

8%

4%

Rent Collection

100% of all contracted rents due were collected in the year to 31 March 2022 and landlords’

rights to enforce rent collection are now back to normal.

The portfolio remains well-spread with a focus on index-linked rent reviews and the sectors of

the UK commercial property market which benefit from structural change-industrials (33%),

supermarkets (27%) and alternatives (40% mainly leisure, pubs and hotels). We do not invest in

offices. VIP’S safe, long let indexed portfolio should prove resilient. It has outperformed through

previous turbulent times as shown by the Property Record Table on page 22, delivering long term

above average real returns (benchmark MSCI UK Quarterly Property Index).

Louise Cleary & Matthew Oakeshott

OLIM Property Limited

10 June 2022

Value and Indexed Property Income Trust PLC Annual Report and Financial Statements 2022

Page

14

Property Manager’s Report

Property Portfolio at 31 March 2022

Industrials

Supermarkets

Roadside

•

13 Properties

•

30% of Contracted Rent

•

WAULT* 11.3 Years

•

Indexed 86%

•

10 Properties

•

30% of Contracted Rent

•

WAULT* 8.9 Years

•

Indexed 100%

•

3 Properties

•

7% of Contracted Rent

•

WAULT* 10.4 Years

•

Indexed 100%

Leisure – Pubs

Alternatives

(Caravan Park &

Library)

Leisure – Hotels

•

10 Properties

•

15% of Contracted Rent

•

WAULT* 22.7 Years

•

Indexed 100%

•

2 Properties (3 Tenants)

•

8% of Contracted Rent

•

WAULT* 11.1 Years

•

Indexed 100%

•

2 Properties (Alnwick

under Construction)

•

4% of Contracted Rent

•

WAULT* 13.5 years

•

Indexed 100%

Leisure – Bowling

& Bingo

TOTAL RETURN

FOR THE YEAR

20.2%

•

3 Properties

•

6% of Contracted Rent

•

WAULT* 18.9 Years

•

Indexed 100%

*Weighted Average Unexpired Lease length if all break options exercised

Value and Indexed Property Income Trust PLC Annual Report and Financial Statements 2022

Page

15

Property Manager’s Report

Top ten Holdings by VALUE

Property

Tenant

Sector

% of

Portfolio

by Capital

Value

Newport Isle of Wight

Marks and Spencer

Supermarket

8%

Dover

Park Resorts

Caravan Park

8%

Garstang

Sainsbury’s

Supermarket

6%

Catterick

Premier Inn

Hotel

5%

Aylesford

Kier

Industrial

5%

Milton Keynes

Winterbotham Darby

Industrial

5%

Gloucester

H.M. Government

Industrial

4%

Fareham

Local Authority

Industrial

4%

Stoke on Trent

MKM Building Supplies

Industrial

3%

Chester

MKM Building Supplies

Industrial

3%

Total

51%

DOVER

Value and Indexed Property Income Trust PLC Annual Report and Financial Statements 2022

Page

16

Property Manager’s Report

Sector Weighting %

Capital Value

by Region %

Capital Value

Industrials - 33%

Supermarkets - 27%

Pubs - 13%

Other (Caravan Park &

Library) - 9%

Roadside - 7%

Hotels - 6%

Leisure (Bowling & Bingo) - 5%

33%

27%

13%

6%

5%

7%

9%

South East - 33% (9 Properties)

North - 31% (15 Properties)

South West - 12% (5 Properties)

Scotland - 8% (5 Properties)

East Anglia - 6% (3 Properties)

Midlands - 6% (3 Properties)

London - 3% (2 Properties)

Wales - 1% (1 Property)

33%

31%

8%

12%

6%

6%

3%

1%

Contracted Income by

Tenant %

Contracted Income by

lease expiry % (if all

break options exercised)

Marks & Spencer

Co-operative Group

10%

14%

Stonegate

9%

8%

Sainsbury’s

H.M. Government

7%

Park Resorts

6%

Ten Entertainment Group

5%

Kier Group

5%

Local Authorities

5%

MKM Building Supplies

5%

Premier Inn

2%

2%

2%

2%

4%

4%

4%

Winterbotham Darby

2%

Shepherd Neame

1%

Buzz Group

Screwfix

Tesco

Halfords

Arla Foods

Brake Brothers

A.F. Blakemore

Greene King

BP Oil Uk

1%

1%

1%

20 - 25 years - 14%

25 - 30 years - 2%

15 - 20 years - 11%

10 - 15 years - 31%

5 - 10 years - 40%

Less than 5 years - 2%

WAULT 12.8 years if all

break options exercised

Value and Indexed Property Income Trust PLC Annual Report and Financial Statements 2022

Page

17

Property Manager’s Report

VIP PURCHASES: 12 MONTHS TO 31 MARCH 2022

Dundee – Faraday Street, Dryburgh Industrial

Estate

Sector

Industrial

Tenant

Screwfix

Lease expiry

November 2032

Indexation

Five yearly fixed: 2.5% pa

Purchased

April 2021

Blandford Forum – Langton Road

Sector

Supermarket

Tenant

Marks & Spencer

Lease expiry

July 2030

Indexation

Five yearly RPI-linked: 1% to 3% pa

Purchased

April 2021

Thurrock – 680 London Road

Sector

Industrial

Tenant

Halfords Autocentres

Lease expiry

May 2036

Indexation

Five yearly CPIH-linked: 1% to 3% pa

Purchased

May 2021

Staines – Laleham Road

Sector

Industrial

Tenant

Halfords Autocentres

Lease expiry

May 2036

Indexation

Five yearly CPIH-linked: 1% to 3% pa

Purchased

May 2021

Catterick – Princes Gate Shopping Park, Richmond

Road

Sector

Hotel

Tenant

Premier Inn Hotels

Lease expiry

September 2040

Indexation

Five yearly CPI-linked: 0% to 5% pa

Purchased

May 2021

Value and Indexed Property Income Trust PLC Annual Report and Financial Statements 2022

Page

18

Property Manager’s Report

Louth – Spar Fairfield Services, Bolingbroke Road

Sector

Roadside

Tenant

A.F. Blakemore

Lease expiry

June 2032

Indexation

Five yearly RPI-linked: 1.5% to 3.5% pa

Purchased

June 2021

Bebington – 152 Kings Road, Wirral

Sector

Roadside

Tenant

Sainsbury's Supermarkets

Lease expiry

October 2036

Indexation

Five yearly RPI-linked: 2% to 4% pa

Purchased

July 2021

Alnwick – Willowburn Trading Estate

Sector

Hotel

Tenant

Premier Inn Hotels

Lease expiry

25 years from completion

Indexation

Five yearly CPI-linked: 0% to 4% pa

Purchased

July 2021

Melton Mowbray – Egerton Park Service Station

Sector

Roadside

Tenant

BP Oil UK

Lease expiry

September 2033

Indexation

Five yearly Fixed: 2.5% pa

Purchased

November 2021

Chester – Winsford Way, Sealand Industrial Estate

Sector

Industrial

Tenant

MKM Building Supplies

Lease expiry

January 2038

Indexation

Five yearly RPI-linked: 1% to 3% pa

Purchased

December 2021

Under Construction –

Completion Summer 2022

Value and Indexed Property Income Trust PLC Annual Report and Financial Statements 2022

Page

19

Property Manager’s Report

Stoke on Trent – Stanley Matthews Way

Sector

Industrial

Tenant

MKM Building Supplies

Lease expiry

January 2039

Indexation

Five yearly RPI-linked: 1% to 3% pa

Purchased

December 2021

Westbury – 50 Cory Way, West Wilts Trading Estate

Sector

Industrial

Tenant

Arla Foods

Lease expiry

November 2035

Indexation

Five yearly RPI-linked: 2% to 4% pa

Purchased

December 2021

Newport, Isle of Wight – Litten Park

Sector

Supermarket

Tenant

Marks & Spencer

Lease expiry

March 2027

Indexation

Annual fixed: 1.95%

Purchased

December 2021

Garstang – Park Hill Road

Sector

Supermarket

Tenant

Sainsbury's Supermarkets

Lease expiry

June 2035

Indexation

Five yearly RPI-linked: 1.5% to

4% pa

Purchased

March 2022

Value and Indexed Property Income Trust PLC Annual Report and Financial Statements 2022

Page

20

Property Manager’s Report

VIP Property Portfolio at 31 March 2022

Address

Tenants

Industrials

 

Aberdeen – Gateway Business Park, Moss Road

H.M. Government*

Aylesford – Broadmead House, Bellingham Way, New Hythe

Kier Group*

Chester – Winsford Way, Sealand Industrial Estate

MKM Building Supplies*

Dundee – Faraday Street, Dryburgh Industrial Estate

Screwfix***

Fareham – Mitchell Close, Segensworth East

Hampshire County Council

Gloucester – Falcon Close, Green Farm Business Park, Quedgeley

H.M. Government*

Milton Keynes – Wimblington Drive

Winterbotham Darby*

Staines – Thameside Service Station, Laleham Road

Halfords**

Stoke-on-Trent – Stanley Matthews Way

MKM Building Supplies*

Thetford – Units 1-4, Baird Way, Fison Way Industrial Estate

Brake Brothers*

Thirsk – Dalton Airfield, Dalton

H.M. Government*

Thurrock – 680 London Road

Halfords**

Westbury – 50 Cory Way, West Wilts Trading Estate

Arla Foods*

Supermarkets

Aberfoyle – Main Street

Co-operative Group Food**

Barton upon Humber – 12 Market Lane (

Sale completed May 2022

)

Co-operative Group Food*

Blandford Forum – Langton Road

Marks and Spencer*

Cleethorpes – 52 St Peters Avenue

Co-operative Group 

Food*

Garstang – Park Hill Road

Sainsbury’s*

Harrogate – Skipton Road

Co-operative Food Group*

Invergordon – 110 High Street

Co-operative Group Food**

Kirriemuir – 33 The Roods

Co-operative Group Food*

Newport, Isle of Wight – Litten Park

Marks and Spencer***

York – 103-104 Hull Road

Co-operative Group Food***

Pubs

 

Bedford – The Rose, 45 High Street

Stonegate*

Bournemouth – Slug and Lettuce, 2 Dean Park Crescent

Stonegate*

Canterbury – The Bishop's Finger, 13 St. Dunstan Street

Shepherd Neame*

Cheltenham – The Spectre, 73-75 High Street

Stonegate*

Coventry – Castle Grounds, 7 Little Park Street

Stonegate*

London – The Bishop's Finger, West Smithfield

Shepherd Neame*

London – The Prince of Wales, 48 Cleaver Square

Shepherd Neame*

Newcastle-upon-Tyne – The Percy Arms, Percy Street

Stonegate*

Oxted – The Old Bell, 18 High Street

Greene King***

Selby – The George Inn, Market Place

Stonegate*

Value and Indexed Property Income Trust PLC Annual Report and Financial Statements 2022

Page

21

Property Manager’s Report

Address

Tenants

Other

 

Dover – St. Margaret's Holiday Park, Reach Road

Park Resorts*

Risca – 77 Tredegar Street

Caerphilly Borough Council***

Tesco*

Roadside

 

Bebington – 152 Kings Road, Wirral

Sainsbury's*

Louth – Spar Fairfield Services, Bollingbroke Road, Fairfield

Industrial Estate

A.F. Blakemore and Son*

Melton Mowbray – Egerton Park Service Station, Leicester Road

BP Oil***

Hotels

Alnwick – Willowburn Trading Estate

(Development)

To be Premier Inn** (Practical

Completion summer 2022)

Catterick – Princes Gate Shopping Park, Richmond Road

Premier Inn**

Leisure

 

Bradford – Tong Street (

Sale completed May 2022

)

Buzz Group*

Doncaster – The Leisure Park, Bawtry Road

Ten Entertainment Group*

Stafford – TenPin, Greyfriars Place

Ten Entertainment Group*

*

RPI-linked rent increases

**

CPI-linked rent increases

***

Fixed rent increases

KIRRIEMUIR

Value and Indexed Property Income Trust PLC Annual Report and Financial Statements 2022

Page

22

Property Manager’s Report

VIP’s Property Record Over 35 Years

2022

8,334

155,478

5.4

20.2

19.6

2021

5,152

80,550

6.4

2

1

2020

4,482

70,200

6.4

6

-1

2019

4,372

68,800

6.4

8

4

2018

4,329

68,700

6.3

11

10

2017

4,480

66,775

6.7

13

5

2016

3,940

55,125

7.2

10

11

2015

4,019

54,500

7.4

13

17

2014

3,552

46,475

7.6

11

14

2013

3,543

46,225

7.7

4

3

2012

3,537

48,250

7.3

7

6

2011

3,552

49,075

7.2

9

11

2010

3,463

48,750

7.1

18

17

2009

3,278

44,850

7.3

-11

-25

2008

3,261

51,000

6.4

0

-9

2007

3,116

54,525

5.7

15

16

2006

3,219

52,250

6.2

21

21

2005

3,124

45,875

6.8

21

17

2004

3,052

40,375

7.5

15

12

2003

3,089

40,550

7.6

12

9

2002

3,013

38,800

7.8

13

7

2001

3,117

39,825

7.8

10

10

2000

3,054

39,800

7.7

15

15

1999

3,410

41,055

8.3

25

11

1998

3,141

34,800

9.0

15

17

1997

3,111

32,805

9.5

10

12

1996

2,840

29,440

9.6

9

5

1995

2,948

31,125

9.5

10

6

1994

2,806

29,835

9.4

23

26

1993

2,773

26,415

10.5

12

-1

1992

2,709

25,880

10.5

10

-3

1991

2,331

23,800

9.8

2

-10

1990

2,050

24,390

8.4

15

15*

1989

1,915

23,475

8.2

30

30*

1988

1,329

14,939

8.9

24

26*

1987

1,155

11,375

10.2

N/A

N/A

*

MSCI (ex IPD) UK Quarterly Property Index 12 months total returns to 31 March; except 1988 – 1990: IPD Annual Index

Value and Indexed Property Income Trust PLC Annual Report and Financial Statements 2022

Page

23

Equity Manager’s Report

Patrick Harrington

UK Equities

Market Background

The UK stock market gave a good absolute

return over VIP’s financial year, with the FTSE

All-Share Index delivering a total return of

13.0%, against 19.6% for UK property. For

most of the year progress was steady, driven by

improving sentiment as lockdown restrictions

were eased progressively. However, share prices

dropped sharply in February and early March

2022 after the Russian invasion of Ukraine.

They then recovered to end the quarter only

marginally down.

Property shares were strong over the year to

end March 2022, with the FTSE All Share

Real Estate Investment Trusts (“REITs”) Index

generating a total return of 22.5%. REIT NAV

performance was strong, benefiting from the

post-pandemic recovery in commercial property

values and, in particular, from the strength in

industrial property sector valuations.

Performance

VIP’s equity portfolio performed well ahead

of the wider stock market, reflecting the

better performance of property stocks as a

whole. The portfolio recorded a total return

of 24.1%, which also outperformed the FTSE

All Share REITs Index. The portfolio benefited

from its high exposure to its new investments

in industrial property, and from the strong

performances of its two Food Retailers, Wm

Morrison Supermarkets and Tesco. The former

was the subject of competing private equity

takeover bids and was eventually taken private

at 287p per share, generating a profit of over

£1.5m for VIP. Tesco’s share price was aided

by strong trading and this holding was also

subsequently disposed of at a significant profit.

Portfolio

The last twelve months saw sales of equities

of £36.2m and purchases of £30.5m giving

total transactions of £66.7m, with net sales

of £5.7m. During the year we completed

the sale of the portfolio’s legacy holdings,

switching into property-backed securities. The

new portfolio focused on the industrial sector

with three specialist industrial REITs, Tritax

Big Box REIT, Urban Logistics REIT and

Warehouse REIT, and a large holding in BMO

Real Estate Investments, which mainly invests

in industrial property and retail warehouses.

A new holding in Tesco was established and

an increased investment in Wm Morrison

Supermarkets was made, both at small

premiums to their respective asset values, in

order to gain exposure to the resilient food

retail property sector. As noted above, both

of these investments were realised before the

year end at a significant profit. New holdings

were also made in PRS REIT and Residential

Secure Income REIT, which both have exposure

to attractive RPI-linked leases, and in Real

Estate Credit Investments, which advances

loans secured on property. An initial holding in

Civitas Social Housing was sold after corporate

governance issues came to light. At the end

of March 2022, the equity portfolio had 7

remaining investments valued at £26.9m.

Value and Indexed Property Income Trust PLC Annual Report and Financial Statements 2022

Page

24

Equity Manager’s Report

Since the year end, the portfolio’s three

specialist industrial property holdings,

Tritax Big Box REIT, Urban Logistics REIT

and Warehouse REIT, have been sold for a

good profit and at a premium to their most

recent NAVs. The proceeds have been partly

re-invested in BMO Real Estate Investments at

a discount of 25%.

Patrick Harrington

OLIM Property Limited

10 June 2022

VIP EQUITY HOLDINGS AT 31 MARCH 2022

7,252,446

BMO Real Estate

Investments

Limited

The company has a diversified £400m portfolio of UK properties with

72% of its investments in the industrial and retail warehouse sectors.

The shares trade on a wide discount to NAV.

6,744,775

2,500,000

Urban Logistics

REIT

The company has assets valued at over £700m. It specialises in

smaller and mid-sized single-let logistics sites in urban locations.

Its tenants undertake ‘last mile’ goods distribution to homes and

businesses.

4,750,000

1,750,000

Tritax Big Box

REIT

Tritax has an investment portfolio valued at around £5.5bn

and focuses on large (greater than 100,000 sq ft) industrial and

warehouse units with substantial development exposure.

4,231,500

1,900,000

Warehouse REIT

Warehouse REIT has a £900m portfolio of smaller and mid-sized

industrial properties spread by geography and industrial sector.

3,294,600

2,000,000

Real Estate

Credit

Investments

The company lends money over the short to medium term on

a secured basis to a wide spread of borrowers. The loans are

secured against underlying property assets spread across Europe

with 80% held in either the UK or France

3,010,000

2,500,000

Residential

Secure Income

REIT

The company aims to deliver inflation linked returns by investing

in a portfolio of UK residential shared-ownership and independent

retirement properties. Its leases are index-linked, which should

provide some protection against high inflation.

2,700,000

2,000,000

PRS REIT

PRS has a portfolio of almost 5,000 private rented family homes

in prosperous UK locations, largely outside London and the

South East. Its leases are also index-linked.

2,140,000

26,870,875

Value and Indexed Property Income Trust PLC Annual Report and Financial Statements 2022

Page

25

Business Review

This Business Review is intended to provide an

overview of the strategy and business model of

the Company as well as the key measures used

by the Directors in overseeing its management.

The Company is an investment trust company

that invests in accordance with the investment

objective and investment policy outlined on

page 27 of this Business Review.

Value and Income Trust PLC changed its name

on 22 January 2021 to Value and Indexed

Property Income Trust PLC (VIP or the

Company). VIP’s Ordinary Shares are listed on

the Premium segment of the Official List and

traded on the main market of the London Stock

Exchange. The Company is registered as a public

limited company in Scotland under company

number SC050366. VIP is an investment

company within the meaning of Section 833

of the Companies Act 2006. The Company

has one class of share. VIP is a member of the

Association of Investment Companies (AIC).

The Group

Value and Indexed Property Income Services

Limited (VIS), a wholly owned subsidiary of

the Company, is authorised by the Financial

Conduct Authority to act as the Company’s

Alternative Investment Fund Manager (AIFM).

Capital Structure

As at 31 March 2022, and as at the date of this

Annual Report, VIP’s share capital consisted of

43,557,464 Ordinary Shares of 10p nominal

value in issue and 1,992,511 Ordinary Shares

of 10p each held in Treasury. Each Ordinary

Share in issue entitles the holder to one vote on

a show of hands and, on a poll, to one vote for

every share held.

Share Dealing

Shares in VIP can be purchased and sold in the

market through a stockbroker, or indirectly

through a lawyer, accountant or other

professional adviser. Further information on

how to invest in VIP is detailed on page 98.

Recommendation

of Non-Mainstream

Investment Products

VIP currently conducts its affairs so that the

shares issued by it can be recommended by

independent financial advisers to ordinary retail

investors in accordance with the rules of the

Financial Conduct Authority (FCA) in relation

to non-mainstream investment products and

intends to do so for the foreseeable future.

VIP’s shares are excluded from the FCA’s

restrictions which apply to non-mainstream

investment products because they are shares in

an investment trust company and the returns to

investors are based on investments in directly

held property and publicly quoted securities.

Value and Indexed Property Income Trust PLC Annual Report and Financial Statements 2022

Page

26

Business Review

Highlights of the Year



Net Asset Value total return (with debt at par)

*

of 15.6% (2021: 12.3%) over one year and 2.7% (2021: -8.5%)

over three years.



Share Price total return

*

of 15.8% (2021: 39.3%) over one year and 13.3% (2021: -3.3%) over three years.



FTSE All-Share Index total return of 13.0% (2021: 26.7%) over one year and 16.8% (2021: 9.9%) over

three years.



MSCI Quarterly Property Index total return of 19.6% over one year.



Dividends for year up 2.4% - increased for the 35th consecutive year.

Financial Record

NAV (valuing debt at

par) (p)

44.0

55.1 213.9 260.6 299.0 251.0 165.6 231.8 249.1 253.8 298.2 325.5 326.9 319.0 345.5 330.5

332.5 253.1 271.1 314.3

NAV (valuing debt at

market) (p)*

N/A

N/A 189.0 226.9 271.1 222.7 129.6 218.3 233.7 227.6 269.8 304.3 299.5 299.2 318.1 309.2

312.2 232.7 256.6 305.0

Ordinary share price (p)

42.0

52.0 181.0 227.0 253.0 166.0

88.5 169.0 186.0 181.5 210.8 265.0 254.3 221.8 255.0 262.0

251.0 165.0 218.0 239.0

Discount of share price

to NAV (valuing debt at

market) (%)

–

–

4.2

0.0

6.7

25.5

31.7

22.5

20.4

20.3

21.9

12.9

15.1

25.9

19.8

15.3

19.6

29.1

15.0

21.6

Dividend per share (p)

N/A

1.25

6.2

6.4

6.7

7.4

7.5

7.6

7.8

8.05

8.3

8.5

9.0

10.5

11.0

11.4

11.8

12.1

12.3

12.6

Total assets less current

liabilities (£m)

17.4

24.8 133.0 156.8 174.8 151.8 111.5 141.8 149.4 151.3 171.2 183.6 189.0 185.5 207.3 200.4

205.6 176.2 177.6 196.5

Value and Indexed Property Income Trust PLC Annual Report and Financial Statements 2022

Page

27

Business Review

INVESTMENT OBJECTIVE

AND INVESTMENT POLICY

Investment Objective

The Company invests mainly in directly held

UK commercial property to deliver secure,

long-term, index-linked income and partly in

property-backed UK securities. The Company

aims to achieve long-term, real growth in

dividends and capital value without undue risk.

Investment Policy

The Company’s policy is to invest in directly

held UK commercial property, property-backed

securities listed on the London Stock Exchange

and cash or near cash securities. The Company

will not invest in overseas property or securities

or in unquoted companies. UK directly held

commercial property will usually account for

at least 80 per cent. of the total portfolio but

it may fall below that level if relative market

levels and investment value, or a desired

increase in cash or near cash securities, make it

appropriate.

The Company will target secure income and

capital returns linked to inflation, mainly

through its diversified portfolio of UK property

assets, let or pre-let to a broad range of strong

tenants on long leases with rental growth

subject to index-linked or fixed increases. The

Company has not set any geographical limits,

except that it may invest in all four nations

of the United Kingdom. It has also set no

structural limits and expects the portfolio to be

focused on (but not limited to), the industrial/

warehouse, supermarket, roadside and leisure

sectors (including for example, caravan parks,

pubs, hotels, garden and bowling centres)

income strips and ground rents. Offices and

high street retail properties would not be

priority sectors for investment. In order to

manage risk in the portfolio, at the time of

purchase, no single property asset will exceed

in value 25 per cent. of the Company’s gross

asset value and no single tenant (except UK

Government and public sector) will account for

more than 30 per cent. of the Company’s total

rental income.

In order to limit the risk to the Company’s

overall total portfolio of assets that are derived

from any particular securities investment,

no individual shareholding will account for

more than 10 per cent. of the gross assets of

the Company at the time of purchase. The

Company will not use derivatives. The Company

is permitted to invest cash held for working

capital purposes and awaiting investment in cash

deposits, gilts and money market funds.

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.

Borrowing policy

The Company has a longstanding policy of

funding most of the increases in its property

portfolio through the judicious use of

borrowings. Gearing will normally be within

a range of 25 per cent. and 50 per cent. of the

total portfolio. The Company will not raise

new borrowings if total net borrowings would

then represent more than 50 per cent. of the

total assets.

Until 2015, all borrowings had been long-term

debentures to provide secure long-term

funding, and avoiding the risks associated with

short-term funding of having to sell illiquid

assets at a low point in markets if loans had

to be repaid. Detail of the Company’s current

borrowings, comprising two fixed term secured

loan facilities and the 9.375% Debenture

Stock 2026, can be found in Note 12 to the

Financial Statements on pages 85 to 86 and

in Note 24 to the Financial Statements on

page 95 of this Annual Report. As announced

Value and Indexed Property Income Trust PLC Annual Report and Financial Statements 2022

Page

28

Business Review

on 24 May 2022, the Company has voluntarily

decided to redeem the 2026 Debenture Stock

early on 28 June 2022. The redemption

price will be determined in accordance with

the conditions set out in the Trust Deed

and will be communicated to holders of the

2026 Debenture Stock shortly before the

redemption date.

Performance, Results

and Dividend

As at 31 March 2022, the Net Asset Value

(NAV) total return (with debt at par) over one

year was 15.6% and the Share Price total return

over one year was 15.8%. This compares to the

FTSE All-Share Index total return over one year

of 13.0% and the MSCI UK Quarterly Property

Index total return of 19.6%. Total assets

less current liabilities were £196.5 million. A

review of the performance of the property and

equity portfolios is detailed in the Chairman’s

Statement on pages 2 to 3 and in the Property

and Equity Manager’s Reports on pages 4 to 24.

For the year to 31 March 2022, quarterly

dividends of 3.0p per share were each paid

on 29 October 2021, 28 January 2022 and

29 April 2022. The Directors have declared

that a final dividend of 3.6p per Ordinary Share

(2021: 3.6p), if approved by Shareholders at

the 2022 AGM, is paid on 29 July 2022 to

Shareholders on the register on 1 July 2022.

The ex-dividend date is 30 June 2022. This

represents an annual increase in dividends

of 2.4% as compared with the 9.0% and

7.0% annual increases in the Retail Price and

Consumer Price Indices, respectively, as at the

end of March 2022.

Principal and Emerging

Risks and Uncertainties

The Board has an ongoing process for identifying,

evaluating and monitoring the principal and

emerging risks and uncertainties facing the

Group and the Parent Company. The risk register

forms a key part of the Group and the Parent

Company’s risk management framework used

to carry out a robust assessment of the risks,

including a significant focus on the controls

in place to mitigate them. The principal and

emerging risks and uncertainties which affect the

Group’s and the Company’s business are:

Market Risk

The fair value of, or future cash flows from,

a financial instrument held by the Group may

fluctuate because of changes in market prices.

This market risk comprises three elements -

price risk, interest rate risk and currency risk.

Changes in market prices (other than those

arising from interest rate or currency risk) may

affect the value of the Group’s investments.

For equities, asset allocation and stock

selection, as set out in the Investment Policy on

page 27, both act to reduce market risk.

OLIM Property Limited (OLIM Property) is

the Investment Manager responsible for the

management of the Company’s property and

equities portfolios.

VIS delegates its portfolio management

responsibilities to OLIM Property, which,

as well as managing the property portfolio,

actively monitors market prices throughout

the year and reports to VIS and to the Board,

which meet regularly in order to review

investment strategy. The equity investments

held by the Group are listed on the London

Stock Exchange. All investment properties held

by the Group are commercial properties located

in the UK with long-term, index-linked income

streams.

Interest rate movements may affect:



the fair value of the investments in

property;



the level of income receivable on cash

deposits; and



the fair value of borrowings.

Value and Indexed Property Income Trust PLC Annual Report and Financial Statements 2022

Page

29

Business Review

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 a debenture stock

and two secured term loans, with four and

eleven year terms remaining, providing secure

long-term funding. It is the Board’s policy to

maintain a gearing level, measured on the most

stringent basis of calculation after netting off

cash equivalents, of between 25% and 50%.

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 rate risk profile section of Note 21 to

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 on

behalf of VIP by an outsourced dealing

agent. Settlement of these transactions is

executed by a large investment bank whose

credit standing is reviewed periodically by

OLIM Property (which reports to VIS).



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. VIS carries

out periodic reviews of the Depositary’s

operations and reports its findings to

the Company. This review also includes

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.

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 20 years (2021: 17 years) and 13 years if

break options are exercised. Details of the

tenant and geographical spread of the portfolio

are set out on page 16. The long-term record

of performance through the varying property

cycles since 1987 is set out on page 22. OLIM

Property is responsible for property investment

management, with surveyors, solicitors and

managing agents acting on the portfolio under

OLIM Property’s supervision.

Value and Indexed Property Income Trust PLC Annual Report and Financial Statements 2022

Page

30

Business Review

Political Risk

The EU (Future Relationship) Act 2020 came

into effect on 1 January 2021 and the full

political, economic and legal consequences of

the UK leaving the European Union (EU) are

not yet known. It is possible that investments

in the UK may be more difficult to value

and assess for suitability of risk, harder to

buy or sell and may be subject to greater or

more frequent rises and falls in value. In the

longer term, there is likely to be a period

of uncertainty as the UK seeks to negotiate

its ongoing relationship with the EU and

other global trade partners. The UK’s laws

and regulations, including those relating to

investment companies, may in future, diverge

from those of the EU. This may lead to changes

in the operation of the Company or the rights

of investors in the territories in which the shares

of the Company may be promoted and sold.

The Board reviews regularly the political

situation, together with any associated changes

to the economic, regulatory and legislative

environment, to ensure that any risks arising

are mitigated as effectively as possible.

An explanation of certain economic and

financial risks and how they are managed

is contained in Note 21 to the Financial

Statements.

Climate Change and

Social Responsibility Risk

The Board recognises that climate change is

an important emerging risk that all companies

should take into consideration within their

strategic planning. As referred to elsewhere in

this Strategic Report on pages 34, 37, 38 and

in the Statement of Corporate Governance on

page 50 in this Annual Report, the Company

has little direct impact on environmental issues.

As an investment trust company, the Company

has no direct employee or environmental

responsibilities. The Board is aware that

the Manager continues to take into account

environmental, social and governance matters

when considering investments.

Economic Risk

The valuation of the Company’s investments

may be affected by underlying economic

conditions, such as fluctuating interest rates,

rising inflation, increased fuel and energy costs,

and the availability of bank finance, all of which

can be impacted during times of geopolitical

uncertainty and volatile markets, including

during the coronavirus pandemic and the

situation in Ukraine. The Board monitors the

economic and market environment closely, and

the situation in Ukraine, and believes that the

diverse well-spread, long let indexed portfolio

should prove resilient.

Additional risks and uncertainties include:



Discount volatility:

The Company’s shares

may trade at a price which represents a

discount to its underlying net asset value.



Regulatory risk:

The Directors strive to

maintain a good understanding of the

changing regulatory agenda and consider

emerging issues so that appropriate changes

can be implemented and developed in good

time. The Group operates in a complex

regulatory environment and, therefore, faces

a number of regulatory risks. A breach of

Section 1158 of the Corporation Tax Act

2010 would result in the Company being

subject to capital gains tax on portfolio

investments. Breaches of other regulations,

including but not limited to, the Companies

Act 2006, the FCA Listing Rules, the FCA

Disclosure, Guidance and Transparency

Rules, the Market Abuse Regulation, the

Packaged Retail and Insurance-based

Investment Products (PRIIPs) Regulation,

the Second Markets in Financial Instruments

Directive (MiFID II) and the General Data

Protection Regulation (GDPR), could lead

to a number of detrimental outcomes and

reputational damage.

The Company is also required to comply

with tax legislation under the Foreign

Account Tax Compliance Act and the

Common Reporting Standard. The Company

has appointed its registrar, Computershare,

to act on its behalf to report annually to HM

Revenue & Customs (HMRC).

Value and Indexed Property Income Trust PLC Annual Report and Financial Statements 2022

Page

31

Business Review

The Company’s privacy policy is available

to view on the Company’s web pages hosted

by the Investment Manager at

https://www.

olimproperty.co.uk/value-and-indexed-

property-income-trust.html.

Breaches of controls by service providers to

the Company could also lead to reputational

damage or loss. The Audit and Management

Engagement Committee monitors compliance

with regulations by reviewing internal control

reports from the Administrator and from the

Investment Manager.

Alternative Investment

Fund Managers Directive

The Alternative Investment Fund Managers

Directive (AIFMD) introduced an authorisation

and supervisory regime for all managers of

authorised investment funds in the EU.

In accordance with the requirements of the

AIFMD, the Company appointed VIS as its

Alternative Investment Fund Manager (AIFM)

and BNP Paribas Securities Services as its

Depositary. VIS’s status as AIFM remains

unchanged following the UK’s departure from

the EU. The Board has controls in place in the

form of regular reporting from the AIFM and

the Depositary to ensure that both are meeting

their regulatory responsibilities in relation to

the Company.

Key Performance

Indicators

At each Board Meeting, the Directors consider

a number of performance measures to assess the

Company’s success in achieving its objectives

and which also enable Shareholders and

prospective investors to gain an understanding

of its business.

A historical record of these performance

measures, with comparatives, together with

the Alternative Performance Measures (APMs)

are shown in the Highlights of the Year and

Financial Record section on page 26 of this

Business Review. Definitions of the APMs can

be found in the Glossary on page 100.

Following the change in investment policy to

invest predominantly in property, the Directors

have carried out a review of the key performance

indicators to determine the performance of the

Company. The Directors have identified the

following as key performance indicators:



Net asset value and share price total

returns relative to the MSCI UK Quarterly

Property Index and FTSE All-Share Index

(total returns); and



Dividend growth relative to consumer

price inflation.

The Manager’s Reports on pages 4 to 24

report on how the Company performed during

the year under review against these indices.

The net asset value (NAV) total return is

considered to be an appropriate long-term

measure of Shareholder value as it includes

the current NAV per share and the sum of

dividends paid to date.

The share price total return relative to the

FTSE All-Share Index (total return) is the

theoretical return including reinvesting each

dividend in additional shares in the Company

at the current mid-market price on the day

that the shares go ex-dividend.

The medium term dividend policy is for

increases at least in line with inflation.

The Board reviews the Company’s rental and

investment income and operational expenses

on a quarterly basis, as the Directors consider

that both of these elements are important

components in the generation of Shareholder

returns. Further information can be found in

Notes 2 and 4 to the Financial Statements on

pages 78 and 79.

Value and Indexed Property Income Trust PLC Annual Report and Financial Statements 2022

Page

32

Business Review

In addition, the Directors will consider

economic, regulatory and political trends and

factors that may impact on the Company’s

future development and performance.

Share Buy-backs

No Ordinary Shares were bought back in the

year to 31 March 2022 (2021: 1,992,511

Ordinary Shares bought back). As at 31 March

2022, and as at the date of this Annual Report,

1,992,511 Ordinary Shares of 10p each are

held in Treasury. Further information can be

found in Note 14 to the Financial Statements

on page 86.

At the forthcoming AGM, the Board will seek

the necessary Shareholder authority to continue

to conduct share buy-backs.

Statement of Compliance

with Investment Policy

The Company is adhering to its stated

investment policy and managing the risks arising

from it. This can be seen in various tables and

charts throughout this Annual Report, and from

the information provided in the Chairman’s

Statement (pages 2 to 3) and in the Manager’s

Property and Equity Reports (pages 4 to 24).

Value and Indexed Property Income Trust PLC Annual Report and Financial Statements 2022

Page

33

Business Review

The Board’s Section 172 Duty and Stakeholder

Engagement

The Directors recognise the importance of an effective Board and its ability to discuss, review and

make decisions to promote the long-term success of the Company and protect the interests of its key

stakeholders. As required by Provision 5 of The AIC Code of Corporate Governance (the AIC Code)

(and in line with The UK Corporate Governance Code (the Code)), the Board has discussed the

Directors’ duty under Section 172 of the Companies Act and how the interests of key stakeholders

have been considered in the Board discussions and decision making during the year. This has been

summarised in the table below:

Shareholders

AGM – Shareholders are encouraged to

attend the AGM and are provided with the

opportunity to ask questions and engage with

the Directors and the Manager. Shareholders

are also encouraged to exercise their right to

vote on the resolutions proposed at the AGM

(please refer to the Chairman’s Statement on

pages 2 to 3).

Shareholder documents – The Company

reports formally to Shareholders by publishing

Annual and Interim Reports, normally in June

and November each year.

Significant matters or reporting obligations

are disseminated to Shareholders by way of

announcement to the London Stock Exchange.

The Company Secretary acts as a key point of

contact for the Board and all communications

received from Shareholders are circulated to

the Board.

Other Shareholder events include investor

and wealth manager lunches and roadshows

organised by the Company’s Broker at which

the Manager is invited to present.

Dividend declarations – The Board recognises the

importance of dividends to Shareholders and takes

this into consideration when making decisions to

pay quarterly and propose final dividends for each

year. Further details regarding dividends for the

year under review can be found in the Chairman’s

Statement on pages 2 to 3.

Share buy-back policy – the Directors recognise

the importance to Shareholders of the Company

maintaining a buy-back policy and considered this

when establishing the current programme. Further

details can be found in this Business Review on

page 32, and in the Directors’ Report on page 41.

Shareholder communication and feedback from

the Broker feeds directly into the Board’s annual

strategy review, the asset allocation considerations

and the Manager’s guidance on desirable

investment characteristics.

Investee

companies

and assets

Quarterly Board Meetings – The Manager

reports to the Board on the Company’s

investment portfolio and the Directors

challenge the Manager where they feel it

is appropriate.

The Manager worked closely with all tenants

during the COVID-19 pandemic, and, as a

result,100% of all contracted rents due were

collected in the year to 31 March 2022.

The Directors are aware that the exercise of

voting rights is key to promoting good corporate

governance and, through the Manager, ensures

that the listed companies are encouraged to adopt

best practice corporate governance. The Board has

delegated the responsibility for monitoring the

listed companies to the Manager and has given

it discretion to vote in respect of the Company’s

holdings in the equity portfolio, in a way that

reflects the concerns and key governance matters

discussed by the Board.

Manager

Quarterly Board Meetings – The Manager

attends every Board Meeting and presents a

detailed portfolio analysis and reports on key

issues such as performance of the property and

equities portfolios.

The Directors and the Manager are cognisant

of the Company’s investment policy and the

strategy agreed by the Board, which the

Manager has been tasked with implementing,

which has resulted in a reduction in the number

of equity investments and an increase in the

number of properties held in the portfolio.

The Board engages constructively with the

Manager to ensure investments are consistent

with the agreed strategy and investment policy.

Value and Indexed Property Income Trust PLC Annual Report and Financial Statements 2022

Page

34

Business Review

Registrar

Review meetings and control reports.

The Directors review the performance of all third

party service providers; this includes ensuring

compliance with GDPR.

Depositary

and

Custodian

Regular statements and control reports

received, with all holdings and balances

reconciled.

The Directors review the performance of all third

party providers, including oversight of securing

the Company’s assets.

Advisers

The Company relies on the expert audit,

accounting and legal advice received from its

Auditor, Administrator and Legal Advisers.

The Directors review the performance of all third

party service providers.

There were no key decisions made in the year

to 31 March 2022 that require to be disclosed.

Employee, Environmental

and Human Rights Policy

As an investment trust company, the Company

has no direct employee or environmental

responsibilities, nor is it responsible for the

emission of greenhouse gases. Its principal

responsibility to Shareholders is to ensure that

the investment portfolio is properly managed

and invested. The Company has no employees

and, accordingly, has no requirement to report

separately on employment matters.

Management of the investment portfolio is

undertaken by the Investment Manager through

members of its portfolio management team. In

light of the nature of the Company’s business,

there are no relevant human rights issues and,

therefore, the Company does not have a human

rights policy.

Independent Auditor

The Company’s Independent Auditor is

required to report if there are any material

inconsistencies between the content of the

Strategic Report and the Financial Statements.

The Independent Auditor’s Report can be found

on pages 58 to 65.

Future Strategy

The Board and the Investment Manager intend

to maintain the strategic policies set out above

for the year ending 31 March 2023 as it is

believed that these are in the best interests of

Shareholders.

The Company’s Viability Statement is included

on pages 36 to 37.

Approval

This Business Review, and the Strategic Report

as a whole, was approved by the Board of

Directors and signed on its behalf by:

James Ferguson

Chairman

10 June 2022

Value and Indexed Property Income Trust PLC Annual Report and Financial Statements 2022

Page

35

Directors’ Details

All Directors, other than Matthew Oakeshott, are members of the Audit and Management Engagement Committee and the

Nomination Committee.

All Directors, other than Matthew Oakeshott, are also directors of Value and Indexed Property Income Services Limited.

James Ferguson

Chairman

James Ferguson was appointed

as a Director in 1986 and as

Chairman in 1994. He joined

Stewart Ivory in 1970, became

chairman in 1989 and retired

in 2000. He is chairman of

The Scottish Oriental Smaller

Companies Trust PLC and Northern

3 VCT PLC. He is also the senior

independent director of The

Independent Investment Trust

PLC. James is a former deputy

chairman of the Association of

Investment Companies.

Matthew Oakeshott

Matthew Oakeshott, after

studying economics at Oxford

University and a period as

special adviser to Mr Roy Jenkins

as Home Secretary, joined

S.G.Warburg & Co in 1976 and

became a director of Warburg

Investment Management in 1978.

He was Investment Manager of

Courtaulds Pension Fund from

1981 to 1985. He is chairman of

OLIM Property Limited which

manages the Company’s property

and equity portfolios. Matthew

is one of the original founders

of the Company having served

previously on the Board from 1

April 2007 to 1 April 2019. He was

re-appointed as a Director on 10

September 2020.

John Kay

Sir John Kay is an economist

specialising in the application of

economics to business issues. He

has been chairman of London

Economics, has held chairs at

the London Business School

and Oxford University. John

was knighted in the Queen’s

2021 Birthday Honours List for

services to economics, finance

and business. He was appointed

as a Director on 4 February 1994

and is the Company’s Senior

Independent Director and Chair of

the Nomination Committee.

David Smith

David Smith retired from the legal

firm Shepherd and Wedderburn

LLP in 2008 where he was a

partner for 34 years, specialising

in commercial property. He was

appointed as a Director on 10

July 2009 and chairs the Audit

and Management Engagement

Committee.

Jo Valentine

Baroness Josephine Clare

Valentine was appointed as a

Director on 13 November 2020.

She is a crossbench member

of the House of Lords and her

other current non-executive roles

include vice chair of University

College London and chair of

Heathrow Southern Railway Ltd.

Jo is also a co-director of Place for

Business in the Community. Other

previous roles have included

chief executive of London First;

an investment banker at Barings

Bank; head of the corporate

finance and planning function

at The BOC Group; a National

Lottery commissioner; a member

of the Board of Governors for The

Peabody Trust, a London housing

association; a non-executive

director of HS2 and of Crossrail;

and a board member of a Triple

Point venture capital trust.

Value and Indexed Property Income Trust PLC Annual Report and Financial Statements 2022

Page

36

Directors’ Report

The Directors submit their report together

with the Financial Statements of the Group

and the Company for the year ended

31 March 2022. A summary of the financial

results for the year can be found in the

Highlights of the Year and Financial Record

in the Business Review on page 26. Details of

the final dividend for the year are set out in

the Chairman’s Statement and in the Business

Review within the Strategic Report. The

Statement of Corporate Governance, which

forms part of this Directors’ Report, is shown

on pages 46 to 51.

Principal Activity and

Status

The Company has applied for and has been

accepted as an approved investment trust under

Sections 1158 and 1159 of the Corporation Tax

Act 2010 and Part 2, Chapter 1 of Statutory

Instrument 2011/2999. This approval relates to

accounting periods commencing on or after 1

April 2012. The Directors are of the opinion that

the Company has conducted its affairs so as to

be able to retain such approval. The Company

intends to manage its affairs so that its Ordinary

Shares continue to be a qualifying investment for

inclusion in the stocks and shares component of

an Individual Savings Account.

The Company is a member of the AIC and its

Ordinary Shares are listed on the London Stock

Exchange.

Regulatory Status

As an investment trust company pursuant

to Section 1158 of the Corporation Tax Act

2010, the rules of the FCA in relation to

non-mainstream investment products do not

apply to the Company.

Going Concern

The Group and the Parent Company’s

business activities, together with the factors

likely to affect their future development and

performance, are set out in the Directors’

Report, and the financial position of the Group

and of the Parent Company is described in

the Chairman’s Statement within the Strategic

Report. In addition, Note 21 to the Financial

Statements includes: the policies and processes

for managing the financial risks; details of the

financial instruments; and the exposures to

market price risk, interest rate risk, liquidity

risk, credit risk and price risk sensitivity. The

Directors believe that the Group and the Parent

Company are well placed to manage their

business risks.

Following a detailed review, the Directors have

a reasonable expectation that the Group and

the Parent Company have adequate financial

resources to enable them to continue in

operational existence for the foreseeable future,

being at least 12 months from approval of the

Financial Statements, and accordingly, they have

continued to adopt the going concern basis (as

set out in Note 1(b) to the Financial Statements

on pages 73 and 74) when preparing the Annual

Report and Financial Statements.

Viability Statement

For the purposes of this Viability Statement,

references to “the Company” shall include

the Group and the Parent Company. In

accordance with Provision 31 of the UK

Corporate Governance Code, published in

July 2018 and Principle 36 of the AIC Code of

Corporate Governance, published in February

2019 (the Codes), the Board has considered

the Company’s prospects and risks for the

forthcoming five-year period to 31 March

2027. The Board considers that this five-year

period is appropriate for an investment trust

company of its size and based on the financial

position of the Company as detailed in the

Chairman’s Statement, the Manager’s Property

and Equity Reports and the Business Review of

this Annual Report.

Directors’ Report

Value and Indexed Property Income Trust PLC Annual Report and Financial Statements 2022

Page

37

In making this statement, the Board carried

out a robust assessment of the principal and

emerging risks facing the Company as set out in

the Business Review, including those that might

threaten its business model, future performance,

solvency, or degree of liquidity within the

portfolio. The Board concentrated its efforts

on the major factors that affect the economic,

regulatory and political environment, including

the COVID-19 pandemic, the UK’s departure

from the EU and the situation in Ukraine.

The Board has considered the Company’s

financial position and its ability to liquidate

its portfolio and meet its liabilities and draws

attention to the following points which the

Board took into account in its assessment of the

Company’s future viability:-

a)

The property portfolio was valued at

£155.8m as at 31 March 2022 and is

securing a debenture stock expiring in

2026 and loan facilities expiring in 2026

and 2033 against a required £75.0m.

b)

The Company’s equity investments are

traded on a major stock exchange.

c)

The Company is closed ended in nature

and, therefore, does not require to sell

investments when Shareholders wish to

sell their shares.

d)

The Board has considered the risks faced

by the Company as detailed in the Business

Review and referred to in Note 21 to the

Financial Statements on pages 89 to 94

and have concluded that the Company

would be able to take appropriate action

to protect the value of the Company.

e)

Due to the nature of the business of the

Company and the nature of its investments

and to the Company’s long history, the

Board are able to conclude that expenses

are predictable and modest in relation

to asset values. There is a significant

proportion of expenses on an ad valorem

basis (management fees to 31 March 2022

are 21% of total expenses) which reduces

as NAV declines. Expenses including

interest were covered 1.43 times by income

in the year.

f)

There are no capital commitments

currently foreseen that would alter the

Board’s view.

g)

Details of the financial covenants which

the Company complies with are detailed

in Note 12 to the Financial Statements on

pages 85 and 86.

In assessing the Company’s future viability, the

Board have assumed that investors will wish to

continue to have exposure to the Company’s

activities, in the form of a closed ended entity;

performance will continue to be satisfactory;

and the Company will continue to have access

to sufficient capital.

Accordingly, given the above, the Board has

concluded that there is a reasonable expectation

that the Company will be able to continue in

operation and meet its liabilities as they fall due

over the five years ending 31 March 2027.

Financial Instruments

The Company’s financial instruments comprise

its investment portfolio, cash balances and

debtors and creditors that arise directly from

its operations, including accrued income and

purchases and sales awaiting settlement. The

main risks that the Company faces arising from

its financial instruments are disclosed in Note

21 to the Financial Statements.

Global Greenhouse Gas

Emissions

The Company is a low energy user and

is, therefore, exempt from the reporting

obligations under the Companies (Director’s

Report) and Limited Liability Partnerships

(Energy and Carbon Report) Regulations 2018,

which implement the Government’s policy on

Streamlined Energy and Carbon Reporting

(SECR). The Company has no greenhouse gas

emissions to report from the operations of the

Company, nor does it have responsibility for

any emissions producing sources, including

those within its underlying investment portfolio

under Part 7 of Schedule 7 to the Large

Value and Indexed Property Income Trust PLC Annual Report and Financial Statements 2022

Page

38

Directors’ Report

and Medium-sized Companies and Groups

(Accounts and Reports) Regulations 2008,

as amended.

Share Capital and Voting

Rights

As at 31 March 2022, and as at the date of

approval of this Annual Report, the Company’s

share capital comprised 43,557,464 Ordinary

Shares of 10p nominal value in issue and

1,992,511 Ordinary Shares of 10p nominal

value held in Treasury (31 March 2021:

43,557,464 Ordinary Shares of 10p nominal

value in issue and 1,922,511 Ordinary Shares

of 10p nominal value in Treasury).

Each Ordinary Share in issue entitles the holder

to one vote on a show of hands and, on a poll,

to one vote for every share held.

Directors

Biographies of the current Directors are shown

in the Directors’ Details section on page 35 of

this Annual Report.

The Directors’ interests in the shares of the

Company at the year end are shown in the

table on page 45. The Directors’ interests were

unchanged at the date of this Annual Report.

The Company’s Articles of Association (the

Articles) require that each Director shall retire

and seek re-election at every third Annual

General Meeting (AGM). A Director appointed

during the year is required, under the provisions

of the Company’s Articles, to retire and seek

election by Shareholders at the next AGM.

The Directors take the view, in line with the

AIC Code of Corporate Governance (AIC

Code), that independence is not compromised

by length of service on the Board and that

experience can add significantly to the

Board’s strength.

Accordingly, all Directors who served during

the year, other than Matthew Oakeshott, are

considered by the Board to be independent of

the Company and the Investment Manager

and free of any material relationship with the

Investment Manager. Matthew Oakeshott is not

considered to be independent as he is chairman

of OLIM Property, the Investment Manager,

and a substantial Shareholder.

Notwithstanding the provisions in the Articles,

in accordance with the AIC Code, the Board

has agreed that all Directors should be subject

to annual re-election.

It was announced in the 2021 Annual Report

that James Ferguson intended to retire during

the course of 2022. As referred to in the

Chairman’s Statement on page 3 of this Annual

Report, James Ferguson will retire from the

Board following the conclusion of the 2022

AGM and the Board has agreed to appoint

John Kay as Chairman. John will assume the

role of Chairman following the conclusion of

the 2022 AGM.

The Nomination Committee reviewed the

skills, experience and independence of John

Kay, Matthew Oakeshott, David Smith and

Jo Valentine, being the Directors standing

for re-election, and has no hesitation in

recommending to the Board and to Shareholders

their re-election as Directors at the AGM.

The Board confirms that, following a formal

process of evaluation, the performance of each

Director standing for re-election continues to be

effective and all Directors have demonstrated

commitment to their roles.

John Kay is an economist with over 35 years

investment trust experience and was knighted

in the Queen’s 2021 Birthday Honours

List for services to economics, finance and

business. John is currently the Company’s

Senior Independent Director and Chair of

the Nomination Committee, however, when

he assumes the role of Chairman following

James Ferguson’s retirement, Jo Valentine

will be appointed as the Company’s Senior

Independent Director and David Smith will be

appointed Chair of the Nomination Committee.

Directors’ Report

Value and Indexed Property Income Trust PLC Annual Report and Financial Statements 2022

Page

39

Matthew Oakeshott is one of the original

founders of the Company and had served on

the Board previously for a number of years.

He has extensive investment trust experience

and is the chairman of OLIM Property

Limited, (OLIM Property) the Company’s

Investment Manager.

David Smith was a partner in the legal firm

Shepherd & Wedderburn LLP for 34 years,

specialising in commercial property. David

is the Chair of the Audit and Management

Engagement Committee.

Jo Valentine has extensive corporate finance

experience and has previously worked as

an investment banker with many years’

experience in holding senior positions on

other boards.

Further information on the qualifications,

skills and experience of the Directors subject

to re-election can be found in the Directors’

Details section on page 35 of this Annual

Report.

The Board believes that, for the above

reasons, the contribution of each Director

continues to be important to the continued

long-term success of the Company, as the

combined skills and experience ensure a

balanced Board of Directors with a wealth

of knowledge and understanding in the key

areas that are relevant to the Company. It is,

therefore, believed to be in the best interests

of Shareholders that those Directors standing

for re-election be re-elected and Resolutions to

this effect will be proposed at the 2022 AGM.

Investment Management

The Company complies with the AIFMD

which came into force on 22 July 2014. An

investment management agreement was entered

into by the Company (effective from 22 July

2014) in which the Company appointed VIS, a

wholly owned subsidiary of the Company, as its

AIFM. Under a separate updated and restated

investment management agreement entered

into by the Company and VIS on 15 May 2015

(and further revised on 20 September 2018

and 5 November 2020), VIS has contractually

delegated its management responsibilities for

the property and equities portfolios to OLIM

Property.

The investment management agreement

provides that, with effect from 1 October 2020,

VIP shall pay to OLIM Property a management

fee of 0.6% per annum of the total value of

VIP’s assets which are managed by OLIM

Property (such assets being valued at quarterly

valuation dates on 31 March, 30 June, 30

September and 31 December in each year).

There is no performance fee.

Accordingly, during the year ended 31 March

2022, OLIM Property received an annual

investment management fee of £1,090,000

(2021 - £479,000) excluding VAT.

The Directors, together with the Audit and

Management Engagement Committee and the

Directors of VIS, review the performance of

the Investment Manager and review the terms

and conditions of its appointment on a regular

basis.

Following this review, the Directors are satisfied

that the continuing appointment of OLIM

Property as Investment Manager is in the best

interests of Shareholders as a whole, as the

Company benefits from the specialised team of

investment professionals within OLIM Property.

The costs and expenses of VIS are also met by

the Company.

An additional fee is payable to the Company

Secretary, Maven Capital Partners UK

LLP, in respect of company secretarial and

administrative services.

Value and Indexed Property Income Trust PLC Annual Report and Financial Statements 2022

Page

40

Directors’ Report

Substantial Interests

As at 31 March 2022, the only persons known

to the Company who, directly or indirectly,

were interested in 3% or more of the issued

ordinary share capital of the Company were as

follows:

RATHBONE NOMINEES

LIMITED*

12,886,733

29.59%

INTERACTIVE INVESTOR

SERVICES NOMINEES LIMITED

6,542,763

15.02%

HARGREAVES LANSDOWN

(NOMINEES) LIMITED

4,765,120

10.94%

SMITH & WILLIAMSON

NOMINEES LIMITED

1,356,674

3.11%

*

Included in the Rathbones Nominees Limited holding is

11,555,000 Ordinary Shares (26.5%) held by Matthew Oakeshott.

As at 8 June 2022, being the last practicable

date prior to the publication of this Annual

Report, the only persons known to the

Company who, directly or indirectly, were

interested in 3% or more of the Company’s

issued ordinary share capital were as follows:

RATHBONE NOMINEES LIMITED*

12,826,733

29.45

INTERACTIVE INVESTOR SERVICES

NOMINEES LIMITED

6,661,453

15.29

HARGREAVES LANSDOWN

(NOMINEES) LIMITED

4,890,614

11.23

SMITH & WILLIAMSON

NOMINEES LIMITED

1,483,166

3.41%

*

Included in the Rathbones Nominees Limited holding is

11,555,000 Ordinary Shares (26.5%) held by Matthew Oakeshott.

Independent Auditor

BDO LLP were appointed as the Company’s

Independent Auditor on 19 March 2020.

The Directors are of the view that the

Company’s Independent Auditor should

continue in office and Resolutions 8 and 9 will

be proposed at the 2022 AGM to propose the

re-appointment of BDO LLP and to authorise

the Directors to fix its remuneration. The

Directors have received assurances from BDO

LLP that they are independent and objective and

the Directors remain satisfied that objectivity

and independence is being safeguarded by BDO

LLP. No non-audit services were provided by

BDO LLP to the Company and, accordingly, no

non-audit fees were paid to BDO LLP during the

year to 31 March 2022.

The Directors confirm that, as far as they

are each aware, as at the date of this Annual

Report, there is no relevant audit information

of which the Company’s Independent Auditor

is unaware, and that each Director has taken

all the steps that they might reasonably

be expected to have taken as a Director

to make themselves aware of any relevant

audit information and to establish that the

Company’s Independent Auditor was aware of

that information.

Additional Information

Information relating to dividends, likely future

developments and important events since

the year end are detailed in the Chairman’s

Statement on pages 2 to 3 and in the

Business Review on pages 25 to 34. Where

not provided elsewhere in the Directors’

Report, the following additional information

is required to be disclosed by the Large

and Medium-sized Companies and Groups

(Accounts and Reports) Regulations 2008.

There are no restrictions on the transfer of

Ordinary Shares in the Company, or their

related voting rights, other than certain

restrictions which may from time to time be

imposed by law (for example, the Market

Abuse Regulation). The Company is not aware

of any agreements between Shareholders that

may result in a transfer of securities and/or

voting rights.

The Company’s Articles may only be amended

by the passing of a Special Resolution at a

general meeting of Shareholders.

Annual General Meeting

The Notice of the Annual General Meeting,

which will be held on Friday, 8 July 2022

at 12.30pm at the offices of Shepherd &

Wedderburn LLP, 1 Exchange Crescent,

Conference Square, Edinburgh EH3 8UL and

related notes may be found on pages 101 to

106 of this Annual Report.

Directors’ Report

Value and Indexed Property Income Trust PLC Annual Report and Financial Statements 2022

Page

41

The Board encourages Shareholders to vote at

the AGM and votes can be submitted by hard

copy proxy form, via CREST, or electronically

using the Registrar’s share portal service at

www.investorcentre/eproxy

. Please refer to the

notes to the Notice of Annual General Meeting

on pages 103 to 106 of this Annual Report.

The Notice of Annual General Meeting is

normally sent out at least 20 working days in

advance of the meeting.

Among the Resolutions being put to the AGM,

the following is a more detailed explanation

of Resolutions 10 to 13. Resolutions 1 to 9

are self-explanatory and require no further

explanation.

Issue of Ordinary Shares by the Company

Resolution 10, which is an Ordinary

Resolution, will, if passed, renew the

Directors’ authority to allot new Ordinary

Shares up to a nominal value of £435,574.

This will allow the Directors to allot up

to 4,355,740 Ordinary Shares (being

approximately 10% of the total ordinary

issued share capital of the Company as at the

date of the Notice of Annual General Meeting

set out on pages 101 to 106 of this Annual

Report) (excluding Treasury shares).

During the year ended 31 March 2022, no

Ordinary Shares were allotted (2021: nil).

Limited Disapplication of Pre-emption rights

Resolution 11, which is a Special Resolution, will,

if passed, renew the Directors’ existing authority

to allot new shares or sell Treasury shares for

cash without the shares first being offered to

existing Shareholders in proportion to their

existing holdings. This will give the Directors

authority to make limited allotments or sell

shares from Treasury of up to a nominal value

of £435,574, being up to 4,355,740 Ordinary

Shares, representing approximately 10% of the

total ordinary issued share capital. The authority

to issue shares on a non pre-emptive basis

includes shares held in Treasury (if any) which the

Company sells or transfers, including pursuant to

the authority conferred by Resolution 10. Since

the introduction of The Companies (Acquisition

of Own Shares) (Treasury Shares) Regulations

2003 on 1 December 2003, a listed company

is able to hold shares that it has repurchased in

Treasury rather than cancel them.

New Ordinary Shares will only be issued

at prices representing a premium to the last

published net asset value per share.

Purchase of the Company’s Ordinary Shares

During the year ended 31 March 2022, no

shares were bought back by the Company to

be held in Treasury, (2021: 1,992,511 shares

bought back and held in Treasury).

As at the date of the approval of this Annual

Report, there were 1,992,511 Ordinary Shares

held in Treasury.

The Company’s buy back authority was last

renewed at the AGM held on 23 July 2021.

Special Resolution 12 renews the Board’s

authority to make market purchases of the

Company’s Ordinary Shares in accordance

with the provisions contained in the

Companies Act 2006 and the FCA Listing

Rules. Accordingly, the Company will seek

the authority to purchase up to a maximum of

14.99% of the issued ordinary share capital

(excluding Treasury shares) at the date of

passing of Resolution 12 (being approximately

6,529,263 Ordinary Shares as at the latest

practicable date prior to the publication of

this Annual Report) at a minimum price of

not less than 10 pence per share (being the

nominal value). Under the Listing Rules of

the FCA, the maximum price that may be

paid on the exercise of this authority must not

exceed the higher of: (i) 105% of the average

of the middle market quotations (as derived

from the Daily Official List of the London

Stock Exchange) for the shares over the five

business days immediately preceding the date

of purchase; and (ii) the higher of the last

independent trade and the highest current

independent bid on the trading venue on

which the purchase is carried out.

Value and Indexed Property Income Trust PLC Annual Report and Financial Statements 2022

Page

42

Directors’ Report

The authorities being sought under

Resolutions 10, 11 and 12 shall expire at the

conclusion of the AGM in 2023 or, if earlier,

on the expiry of 15 months from the date

of the passing of Resolutions 10, 11 and 12

unless such authority is renewed prior to such

time. The Directors will only exercise these

authorities if they believe it is advantageous

and in the best interests of Shareholders

and would result in an increase in the net

asset value per share. Any Ordinary Shares

purchased shall either be cancelled or held in

Treasury.

Notice of Meeting

Under the Companies Act 2006, the notice

period for the holding of general meetings

of the Company is 21 clear days unless

Shareholders agreed to a shorter notice

period and certain other conditions are met.

Resolution 13, which is a Special Resolution,

will be proposed to authorise the Directors

to call general meetings of the Company

(other than AGMs) on not less than 14 clear

days’ notice, as permitted by the Companies

Act 2006 amended by the Companies

(Shareholders’ Rights) Regulations 2009.

It is currently intended that this flexibility to

call general meetings on shorter notice will

only be used for non-routine business and

where considered to be in the interests of all

Shareholders. If Resolution 13 is passed, the

authority to convene general meetings on not

less than 14 clear days’ notice will remain

effective until the conclusion of the AGM in

2023 or, if earlier, on the expiry of 15 months

from the date of passing of Resolution 13,

unless renewed prior to such time.

Recommendation

Your Board considers Resolutions 1 to 10

inclusive, which are all Ordinary Resolutions,

and Resolutions 11 to 13 inclusive, which

are all Special Resolutions, to be in the best

interests of the Company and most likely to

promote the success of the Company for the

benefit of its members as a whole. Accordingly,

your Board unanimously recommends that

Shareholders vote in favour of Resolutions

1 to 13 inclusive to be proposed at the AGM

to be held on Friday, 8 July 2022.

By order of the Board

Maven Capital Partners UK LLP

Company Secretary

10 June 2022

Directors’ Remuneration Report

Value and Indexed Property Income Trust PLC Annual Report and Financial Statements 2022

Page

43

This report has been prepared in accordance

with the requirements of the Companies

Act 2006. An Ordinary Resolution for the

approval of this report will be put to the

members of the Company at the forthcoming

AGM. The law requires the Company’s

Auditor to audit certain of the disclosures

provided. Where disclosures have been

audited, they are indicated as such and the

Auditor’s opinion is included in their report

on pages 58 to 65.

The Nomination Committee of the Board,

chaired by John Kay, fulfils the functions

of a remuneration committee in relation to

setting the level of Directors’ fees and the

Remuneration Policy. As none of the Directors

is an executive director, the Company is not

required to comply with the Principles of the

UK Corporate Governance Code in respect of

executive directors’ remuneration. Following

the 2022 AGM, when John Kay will assume

the role of Chairman of the Company,

David Smith will be appointed Chair of the

Nomination Committee.

As at 31 March 2022, and as at the date of

this Annual Report, the Company had five

Directors and their biographies are shown

in the Directors’ Details section on page 35

of this Annual Report. The names of the

Directors who served during the year together

with the fees paid during the year are shown in

the table on page 44.

Remuneration Policy

The Company’s policy is that the

remuneration of the Directors should reflect

the experience of the Board as a whole and

be fair and comparable with that of other

investment trust companies that are similar

in size, have a similar capital structure and

a similar investment objective. Directors are

remunerated in the form of fees, payable

monthly in arrears, to the Director personally

or to a third party specified by him or her. The

fees for the Directors are determined within

the limits set out in the Company’s Articles

of Association, which limit the aggregate of

the fees payable to the Directors to £200,000

and the approval of Shareholders in general

meeting would be required to change this

limit. It is intended that the fees payable

to the Directors should reflect their duties,

responsibilities, and the value and amount of

time committed to the Company’s affairs, and

should also be sufficient to enable candidates

of a high quality to be recruited and retained.

The Directors do not receive bonuses, pension

benefits, share options, long-term incentive

schemes or other benefits, and the fees are

not specifically related to the Directors’

performance, either individually or collectively.

A copy of the Remuneration Policy may be

inspected by the members of the Company at

its registered office.

It is the Board’s intention that the above

Remuneration Policy be put to a Shareholders’

vote at least once every three years and, as a

resolution was approved at the AGM held in

2020, an Ordinary Resolution for its approval

for the three years to 31 March 2026 will next

be proposed at the 2023 AGM.

At the AGM held on 3 September 2020, the

result in respect of the Ordinary Resolution to

approve the Directors’ Remuneration Policy

for the three years to 31 March 2023 was as

follows:

Remuneration

Policy

99.5

0.5

275,095

During the year ended 31 March 2022,

the Board was not provided with advice

or services by any person in respect of its

consideration of the Directors’ remuneration.

However, in the application of the Board’s

policy on Directors’ remuneration, as defined

above, the Committee expects, from time to

time, to review the fees paid to the directors of

other investment trust companies.

Value and Indexed Property Income Trust PLC Annual Report and Financial Statements 2022

Page

44

Directors’ Remuneration Report

During the year ended 31 March 2022, the Nomination Committee carried out a review of the

remuneration policy and the level of Directors’ fees and agreed that the rates of remuneration

should remain unchanged for a second year and will remain at the current level for the year to

31 March 2023, being £30,000 for the Chairman, £24,500 for the Chairman of the Audit and

Management Engagement Committee and £22,000 for each other Director.

An Ordinary Resolution to approve this Directors’ Remuneration Report will be put to

Shareholders at the 2022 AGM. At the AGM held on 23 July 2021, the result in respect of

the Ordinary Resolution to approve the Directors’ Remuneration Report for the year ended

31 March 2021 was as follows:

Remuneration

Report

99.18

0.82

716,914

Directors’ Fees and Total Remuneration (audited)

The Company does not have any employees and Directors’ remuneration comprises solely of

Directors’ fees. The Directors’ fees for the years ended 31 March 2021 and 31 March 2022, and

projected fees for the year ending 31 March 2023, respectively are as follows:

James Ferguson (Chairman)

1

30,000

30,000

3.9

0.0

8,137

John Kay

2

22,000

22,000

4.8

0.0

27,830

Dominic Neary

3

22,000

6,860

4.8

0.0

N/A

Matthew Oakeshott

4

-

-

-

-

-

David Smith (Chair of the Audit and

Management Engagement Committee)

24,500

24,500

4.3

0.0

24,500

Jo Valentine

5

8,433

22,000

N/A

0.0

22,000

Total

106,933

105,360

82,467

The above amounts exclude any employers’ national insurance contributions, if applicable.

No other form of remuneration was received by the Directors and no Director has received

any taxable expenses, compensation for loss of office or non-cash benefit for the year ended

31 March 2022 (2021: £nil).

Directors do not have service contracts, but new Directors are provided with a letter of

appointment. The terms of appointment provide that Directors should retire and be subject to

election at the first AGM after their appointment. The Company’s Articles require all Directors

to retire by rotation at least every three years. As noted in the Directors’ Report, the Board has

decided that, in accordance with the AIC Code, all Directors should stand for annual re-election.

There is no notice period and no provision for compensation upon early termination of

appointment, save for any arrears of fees which may be due.

During the year ended 31 March 2022, no communication had been received from Shareholders

regarding Directors’ remuneration.

Directors’ Remuneration Report

Value and Indexed Property Income Trust PLC Annual Report and Financial Statements 2022

Page

45

Relative Cost of

Directors’ Remuneration

The chart below shows, for the years ended

31 March 2021 and 31 March 2022, the cost

of Directors’ fees compared with the level of

dividend distribution.

Dividends

2022

Directors’

fees 2022

Dividends

2021

Directors’

fees 2021

-

1,000,000

2,000,000

3,000,000

4,000,000

5,000,000

6,000,000

As noted in the Strategic Report, none of

the Directors is executive and, therefore, the

Company does not have a chief executive officer,

nor does it have any employees. In the absence

of a chief executive officer or employees, there is

no related information to disclose.

Directors’ and Officers’

Liability Insurance

The Company purchases and maintains

liability insurance covering the Directors and

Officers of the Company. This insurance is not

a benefit in kind, nor does it form part of the

Directors’ remuneration.

Company Performance

The Board is responsible for the Company’s

investment strategy and performance, although

the management of the Company’s investment

portfolio is delegated to the Investment Manager

through the investment management agreement,

as referred to in the Directors’ Report.

The graph below compares the total returns

on an investment of £100 in the Ordinary

Shares of the Company, for each annual

accounting period for the ten years to

31 March 2022, assuming all dividends are

reinvested, with the total shareholder return

on a notional investment of £100 made up

of shares of the same kinds and number as

those by reference to which the FTSE All-

Share Index is calculated. This index was

chosen for comparison purposes as it was the

most relevant to the Company’s investment

portfolio for the ten year period under review.

VIP Share Price Total Return

2019

2022

2021

2020

2017

2018

2016

2015

2014

Year

Cumulative total return for the ten year period ended 31 March 2022

(figures rebased to 100)

0

80

120

160

40

200

240

280

320

360

FTSE All-Share Total Return

2013

Directors’ Interests

(Audited)

The Directors’ interests in the share capital

of the Company as at 31 March 2022 and as

at the date of this Annual Report are shown

below. There is no requirement for Directors

to hold shares in the Company.

Approval

The Directors’ Remuneration Report was

approved by the Board of Directors and signed

on its behalf by:

Statement of Corporate Governance

Value and Indexed Property Income Trust PLC Annual Report and Financial Statements 2022

Page

46

The Company is committed to, and is

accountable to the Company’s Shareholders

for, a high standard of corporate governance.

The Board has put in place a framework

for corporate governance that it believes is

appropriate for an investment trust company

and enables it to comply with The UK

Corporate Governance Code (the Code),

which is available from the website of the FRC

at

www.frc.org.uk

.

During the year under review, the Company

was a member of the Association of Investment

Companies (AIC), which published a revised

version of its own AIC Code of Corporate

Governance (the AIC Code) in February 2019.

The Board has adopted the principles of the

AIC Code and reports on compliance with these

below. The AIC Code provides a comprehensive

guide to best practice in certain areas of

governance where the specific characteristics of

investment trusts suggest alternative approaches

to those set out in the Code.

The key requirements of the AIC Code

include:

•

a requirement for the annual re-election of

all directors of all investment companies;

•

a requirement that a board should

understand the views of its company’s key

stakeholders and describe in the annual

report how their interests and the matters

set out in Section 172 of the Companies

Act 2006 (the duty to promote the success

of the company) have been considered in

board discussions and decision making;

•

that the chairman of an investment

company may now remain in post

beyond nine years from the date

of first appointment by the board.

Notwithstanding this more flexible

approach, the board is required to

determine and disclose a policy on the

tenure of the chairman.

The AIC Code is available from the AIC

website at

www.theaic.co.uk

.

This Statement of Corporate Governance

forms part of the Directors’ Report.

Application of the

Main Principles of the

AIC Code

This statement describes how the main

principles identified in the AIC Code have

been applied by the Company throughout

the year, as is required by the Listing Rules of

the FCA.

The Board has considered the Principles and

Provisions of the AIC Code, which address the

Principles and Provisions set out in the Code,

as well as setting out additional Provisions

on issues that are of specific relevance to the

Company. The Board considers that reporting

against the Principles and Provisions of the

AIC Code, which has been endorsed by the

FRC, provides more relevant information to

Shareholders. The endorsement by the FRC

means that by reporting against the AIC

Code, the Company is meeting its obligations

under the Code and the associated disclosure

requirements of the Listing Rules, and as

such does not need to report further on issues

contained in the Code which are irrelevant to

them. These include:

•

Provision 9 (dual role of chairman and

chief executive);

•

Provision 19 (tenure of the chair);

•

Provision 25 (internal audit function); and

•

Provision 33 (executive remuneration).

The Board is of the opinion that the Company

has complied fully with the Principles and

Provisions of the AIC Code.

Statement of Corporate Governance

Value and Indexed Property Income Trust PLC Annual Report and Financial Statements 2022

Page

47

The Board

As at the date of this Annual Report, the

Board consists of one female and four male

Directors. Biographies of the current Directors

are shown on page 35 and indicate their high

level and range of investment, industrial,

commercial and professional experience. John

Kay is the Company’s Senior Independent

Director.

Other than Matthew Oakeshott, who is

chairman of OLIM Property and a substantial

Shareholder, all other Directors who served

during the year are considered by the Board

to be independent of the Investment Manager

and free of any material relationship with

the Investment Manager. The Board sets the

Company’s values and objectives and ensures

that its obligations to Shareholders are met.

It has formally adopted a schedule of matters

which are required to be brought to it for

decision, thus ensuring that it maintains

full and effective control over appropriate

strategic, financial, operational and

compliance issues. These matters include:

•

the maintenance of clear investment

objectives and risk management policies;

•

the monitoring of the business activities

of the Company including investment

performance and revenue budgets;

•

Companies Act requirements such

as the approval of the periodic

financial statements and approval and

recommendation of any dividends;

•

major changes relating to the Company’s

structure, including any share buy backs

and share issues;

•

succession planning including Board

appointments and removals and the

related terms;

•

the appointment and removal of the

AIFM, the Investment Manager and the

terms and conditions of the investment

management agreement relating thereto;

•

terms of reference and membership of

Board Committees; and

•

London Stock Exchange/ Financial Conduct

Authority matters, including responsibility

for approval of all circulars, listing

particulars and approval of all releases

concerning matters decided by the Board.

The Board has a procedure in place to

deal with a situation where a Director has

a conflict of interest, as required by the

Companies Act 2006.

There is an agreed procedure for Directors

to take independent professional advice, if

necessary, at the Company’s expense.

The Directors have access to the advice and

services of the Company Secretary, Maven

Capital Partners UK LLP, through its appointed

representatives who are responsible to the Board:

•

for ensuring that Board procedures are

complied with;

•

under the direction of the Chairman, for

ensuring good information flows within

the Board and its Committees; and

•

for advising on corporate governance

matters.

An induction meeting will be arranged on the

appointment of any new Director, covering

details about the Company, the AIFM, the

Investment Manager, legal responsibilities and

investment trust industry matters. Directors

are provided, on a regular basis, with key

information on the Company’s policies,

regulatory and statutory requirements and

internal controls. Changes affecting Directors’

responsibilities are advised to the Board as

they arise.

James Ferguson is Chairman of the Company.

John Kay is the Company’s Senior Independent

Director and Chair of the Nomination

Committee as the other Directors consider that

he has the skills and experience relevant to

that role. There is no Remuneration Committee

Statement of Corporate Governance

Value and Indexed Property Income Trust PLC Annual Report and Financial Statements 2022

Page

48

as the Nomination Committee is responsible

for considering appointments to the Board and

reviewing the level of Directors’ fees. As referred

to elsewhere in this Annual Report, when John

Kay assumes the role of Chairman following

the conclusion of the 2022 AGM, Jo Valentine

will be appointed as the Company’s Senior

Independent Director and David Smith will be

appointed Chair of the Nomination Committee.

David Smith is Chair of the Audit and

Management Engagement Committee as the

other Directors consider that he has the skills

and experience relevant to that role.

The Board meets at least four times each year.

The primary focus of quarterly Board Meetings

is a review of investment performance and

related matters including asset allocation, peer

group information and industry issues. Between

meetings, the Board maintains contact with the

Investment Manager and has access to senior

members of the management teams and to the

company secretarial team.

During the year ended 31 March 2022, the

Board held four Board Meetings (with one

Board Meeting including discussions relating to

strategy); and three Board Committee Meetings

to approve the release of financial results and

approve a change to one of the loan agreements;

In addition, there were two meetings of the

Nomination Committee and three meetings

of the Audit and Management Engagement

Committee.

Accordingly, Directors have attended Board

and Committee Meetings during the year

ended 31 March 2022

1

as follows:

James Ferguson

4 (4)

3 (3)

3 (3)

2 (2)

John Kay

4 (4)

1 (3)

3 (3)

2 (2)

Dominic Neary

2

1 (2)

0 (1)

2 (2)

1 (1)

Matthew

Oakeshott

4 (4)

3 (3)

N/A

N/A

David Smith

4 (4)

1 (3)

3 (3)

2 (2)

Jo Valentine

4 (4)

1 (3)

2 (3)

2 (2)

1

2

To enable the Board to function effectively

and allow Directors to discharge their

responsibilities, full and timely access is given

to all relevant information. In the case of Board

Meetings, this consists of a comprehensive set

of papers, including the Investment Manager’s

review and discussion documents regarding

specific matters. The Directors make further

enquiries when necessary.

The Nomination Committee has undertaken

a formal performance evaluation of the

Chairman, the other Directors and the Board as

a whole. The evaluation of the Chairman is led

by the Senior Independent Director, John Kay.

All Directors are appointed for an initial

period of three years, subject to re-election and

Companies Act provisions and, in accordance

with the Articles, stand for election at the first

AGM following their appointment. The Articles

state that Directors must offer themselves

for re-election at least once every three years.

Notwithstanding the Articles, the Board has

determined that in accordance with the AIC

Code, all Directors should be subject to annual

re-election.

The Board subscribes to the view expressed

in the AIC Code that long-serving Directors

should not be prevented from forming part of

an independent majority. It does not consider

that a Director’s tenure necessarily reduces his

ability to act independently and, following a

formal performance evaluation, believes that

each Director is independent in character and

judgement and that there are no relationships

or circumstances which are likely to affect the

judgement of any Director. The Board’s policy

on tenure is that continuity and experience

are considered to add significantly to the

strength of the Board and, as such, no limit

on the overall length of service of any of the

Company’s Directors, including the Chairman,

has been imposed. The policy on tenure and

the independence of each Director is reviewed

on an annual basis, before the re-election of

any Director is recommended, and the Board

Statement of Corporate Governance

Value and Indexed Property Income Trust PLC Annual Report and Financial Statements 2022

Page

49

considers the need for regular refreshment of

the Directors prior to doing so. The Company

has no executive Directors or employees.

Committees

Each of the Committees has been established

with written terms of reference. The terms of

reference of each of the Committees, which

are available on request from the Registered

Office of the Company, are reviewed and re-

assessed for their adequacy at least annually.

Audit and Management

Engagement Committee

Information regarding the composition,

responsibilities and activities of the Audit and

Management Engagement Committee is detailed

in the Report of the Audit and Management

Engagement Committee on pages 54 to 57.

Nomination Committee

The Nomination Committee comprises all of

the independent Directors and is chaired by

John Kay. Matthew Oakeshott is not a member

of the Nomination Committee as he is not

considered by the Board to be independent. As

the Board has not established a Remuneration

Committee, the Nomination Committee fulfils

the functions of a remuneration committee in

relation to setting the level of Directors’ fees

and the remuneration policy. The Nomination

Committee met twice during the year. The

Committee makes recommendations to the

Board on the following matters:

•

the evaluation of the performance of the

Board and its Committees;

•

reviewing the Board structure, size,

composition and age profile (including the

skills, knowledge, experience and diversity

(including gender);

•

succession planning;

•

the identification and nomination of

candidates to fill Board vacancies, as

and when they arise, for the approval

of the Board;

•

the tenure and re-appointment of any

non-executive Director on an annual basis;

•

proposals for the re-election by

Shareholders of any Director on an

annual basis, having due regard to the

provisions of the AIC Code, the Director’s

performance and ability to contribute to

the Board and long-term success of the

Company;

•

the continuation in office of any Director

at any time;

•

the appointment of any Director to

another office, such as Chairman of the

Audit and Management Engagement

Committee, other than to the position of

Chairman; and

•

reviewing the level of Directors’ fees.

Although the Company does not have a

formal policy on diversity, as detailed above,

consideration of Board diversity forms part of

the responsibilities of the Committee.

As referred to elsewhere in this Annual

Report, when John Kay assumes the role of

Chairman following the conclusion of the

2022 AGM, David Smith will be appointed

Chair of the Nomination Committee.

External Agencies

The Board has contractually delegated

to external agencies, certain services: the

depositary and custodial services (which

include the safeguarding of assets); the

registration services; and the day-to-

day accounting and company secretarial

requirements. Each of these contracts

was entered into after full and proper

consideration by the Board of the quality and

cost of services offered. The Board receives

and considers reports from the external

agencies on a regular basis. In addition, ad hoc

reports and information are supplied to the

Board as requested.

Statement of Corporate Governance

Value and Indexed Property Income Trust PLC Annual Report and Financial Statements 2022

Page

50

As the AIFM, VIS has responsibility for the

overall investment management and risk

management of the assets of the Company.

VIS has contractually delegated its day-to-

day investment management responsibilities

for the property and equity portfolios to

OLIM Property (the Investment Manager).

The delegation by VIS of its investment

management responsibilities is in accordance

with the delegation requirements of the

AIFMD. The Investment Manager remains

subject to the supervision and direction of VIS

and is responsible to VIS and ultimately to

the Company in regard to the management of

the investment of the assets of the Company

in accordance with the Company’s investment

objective and policy. VIS has established

a Risk Committee to keep under review

the effectiveness of the Company’s internal

control and risk management systems and

procedures and to identify, measure, manage

and monitor the risks identified as affecting

the Company’s business.

Corporate Governance,

Stewardship and

Proxy Voting

The UK Stewardship Code 2020 sets high

stewardship standards for those investing

money on behalf of UK savers and pensioners,

such as asset owners and asset managers

(and those that support them). Stewardship

is the responsible allocation, management

and oversight of capital to create long-term

value for clients and beneficiaries, leading

to sustainable benefits for the economy, the

environment and society.

The Board is aware of its duty to act in the

interests of the Shareholders and the Directors

believe that the exercise of voting rights lies

at the heart of regulation and the promotion

of good corporate governance. The Directors,

through the Investment Manager, encourage

companies in which investments are made to

adhere to best practice in the area of corporate

governance. The Investment Manager believes

that, where practicable, this can best be

achieved by entering into a dialogue with

investee company management teams to

encourage them, where necessary, to improve

their governance policies. Therefore, the

Board and VIS have delegated responsibility

for monitoring the activities of portfolio

companies to the Investment Manager and has

given discretionary powers to vote in respect

of the holdings in the Company’s investment

portfolio.

Socially Responsible

Investment Policy

The Directors and the Investment Manager

are aware of their duty to act in the interests

of the Company and acknowledge that

there are risks associated with investment in

businesses that fail to conduct business in a

socially responsible manner. Therefore, the

Directors and the Investment Manager take

account of the social, environmental and

ethical factors that may affect the performance

or value of the Company’s investments.

The Directors and the Investment Manager

believe that a company run in the long-term

interests of its shareholders should manage its

relationships with its employees, suppliers and

customers and behave responsibly towards the

environment and society as a whole.

Communication with

Shareholders

The Company places a great deal of

importance on communication with its

Shareholders, all of whom are encouraged

to attend and participate in the AGM, as it

is the key forum for communication with

Shareholders. The AGM is an event that

all Shareholders are welcome to attend and

participate in. The Notice of Annual General

Meeting sets out the business of the AGM

and the Resolutions are explained more fully

in the Directors’ Report and in the Directors’

Remuneration Report. Separate Resolutions

are proposed for each substantive issue and

Shareholders have the opportunity to put

questions to the Board and to the Investment

Manager. The results of proxy voting are

relayed to Shareholders after the Resolutions

have been voted on by a show of hands.

Nominated persons, often the beneficial

Statement of Corporate Governance

Value and Indexed Property Income Trust PLC Annual Report and Financial Statements 2022

Page

51

owners of shares held for them by nominee

companies, normally may attend shareholder

meetings and are usually invited to contact the

registered shareholder, normally a nominee

company, in the first instance in order to be

nominated to attend the meeting and to vote

in respect of the shares held for them.

In addition, both the Chairman and Senior

Independent Director are available to meet

major shareholders. Shareholders may contact

the Directors by writing to the Chairman at

the Registered Office. The address for the

Registered Office can be found on page 107.

The Board aims to post the Annual Report

to Shareholders at least twenty business days

before the AGM. Annual and Interim Reports

and Financial Statements are distributed to

Shareholders and other parties who have an

interest in the Company’s performance.

Shareholders and potential investors may

obtain up-to-date information on the

Company through the Investment Manager

and the Company Secretary. In order to ensure

that the Directors develop an understanding

of the views of Shareholders, correspondence

between Shareholders and the Investment

Manager or the Chairman is copied to

the Board.

The Company’s web pages are hosted on

the Manager’s website, and can be visited at

https://www.olimproperty.co.uk/value-and-

indexed-property-income-trust.html

from

where Annual and Interim Reports, Company

Announcements and other information on

the Company can be viewed, printed or

downloaded.

Accountability and Audit

The Statement of Directors’ Responsibilities

in respect of the Financial Statements is on

pages 52 and 53 and the Statement of Going

Concern and the Viability Statement are

included in the Directors’ Report on pages 36

and 37. The Independent Auditor’s Report is

on pages 58 to 65.

By order of the Board

Maven Capital Partners UK LLP

Company Secretary

10 June 2022

Value and Indexed Property Income Trust PLC Annual Report and Financial Statements 2022

Page

52

Statement of Directors’ Responsibilities

The Directors are responsible for preparing the

Annual Report and the Financial Statements

in accordance with UK adopted international

accounting standards and applicable laws and

regulations.

Company law requires the Directors to prepare

Financial Statements for each financial year.

Under that law, the Directors are required to

prepare the Group Financial Statements, and

have elected to prepare the Company Financial

Statements, in accordance with UK adopted

international accounting standards. Under

company law, the Directors must not approve

the Financial Statements unless they are

satisfied that they give a true and fair view of

the state of affairs of the Group and Company

and of the profit or loss for the Group and

Company for that period.

In preparing these Financial Statements, the

Directors are required to:

•

select suitable accounting policies and then

apply them consistently;

•

make judgements and accounting estimates

that are reasonable and prudent;

•

state whether they have been prepared in

accordance with international accounting

standards in conformity with the

requirements of the Companies Act 2006,

subject to any material departures disclosed

and explained in the Financial Statements;

•

state whether they have been prepared in

accordance with UK adopted international

accounting standards, subject to any

material departures disclosed and

explained in the Financial Statements;

•

prepare the Financial Statements on

the going concern basis unless it is

inappropriate to presume that the

Company will continue in business; and

•

prepare a Directors’ Report, a Strategic

Report and Directors’ Remuneration

Report which comply with the

requirements of the Companies Act 2006.

The Directors are responsible for keeping

adequate accounting records that are

sufficient to show and explain the Company’s

transactions and disclose with reasonable

accuracy at any time the financial position

of the Company and enable them to ensure

that the Financial Statements comply with

the Companies Act 2006. They are also

responsible for safeguarding the assets of the

Company and, hence, for taking reasonable

steps for the prevention and detection of fraud

and other irregularities.

The Directors are responsible for ensuring that

the Annual Report and Financial Statements,

taken as a whole, is fair, balanced and

understandable and provides the information

necessary for Shareholders to assess the Group’s

position and performance, business model and

strategy.

The Directors are responsible for ensuring

the Annual Report and Financial Statements

are made available on a website. Financial

Statements are published on the Company’s

web pages hosted by the Investment Manager

in accordance with legislation in the

United Kingdom governing the preparation

and dissemination of financial statements,

which may vary from legislation in other

jurisdictions. The maintenance and integrity of

the Company’s web pages is the responsibility

of the Directors. The Directors’ responsibility

also extends to the ongoing integrity of the

Financial Statements contained therein.

Statement of Directors’ Responsibilities

Value and Indexed Property Income Trust PLC Annual Report and Financial Statements 2022

Page

53

Directors’ Responsibility

Statement

Each Director confirms, to the best of his or

her knowledge, that:

•

the Financial Statements have been

prepared in accordance with the

applicable set of accounting standards

and give a true and fair view of the assets,

liabilities, financial position and profit or

loss of the Group and Company; and that

•

the Annual Report includes a fair review

of the development and performance of

the business and the financial position of

the Group and Company, together with

a description of the principal risks and

uncertainties that they face.

The Directors confirm that the Annual

Report and Financial Statements taken as a

whole is fair, balanced and understandable

and provides the information necessary for

Shareholders to assess the Group’s position

and performance, business model and strategy.

For and on behalf of the Board of

Value and Indexed Property Income Trust PLC

James Ferguson

Chairman

10 June 2022

Value and Indexed Property Income Trust PLC Annual Report and Financial Statements 2022

Page

54

Report of the Audit and Management

Engagement Committee

The Audit and Management Engagement

Committee is chaired by David Smith. The

Committee comprises all of the independent

Directors. Matthew Oakeshott is not a member

of the Committee as he is not considered by

the Directors to be independent. The Board

is satisfied that at least one member of the

Committee has recent and relevant financial

experience and that the Committee as a whole

has competence relevant to the sector in which

the Company operates.

Responsibilities

The principal responsibilities of the Committee

include:

•

the review of the effectiveness of the

internal control environment of the

Company, including the receipt of reports

from the Investment Manager and the

Administrator on a regular basis;

•

the integrity of the Interim and Annual

Reports and Financial Statements and

reviewing any significant financial

reporting judgements contained therein;

•

the review of the terms of appointment

of the Auditor, together with its

remuneration;

•

the review of the scope and results of the

audit and the independence and objectivity

of the Auditor;

•

the review of the Auditor’s Board Report

and any required response;

•

meetings with representatives of the

Investment Manager;

•

the review of the AIFM agreement and

investment management agreement;

•

providing advice on whether the Annual

Report and Financial Statements, taken as a

whole, is fair, balanced and understandable

and provides the information necessary

for Shareholders to assess the Company’s

position and performance, business model

and strategy; and

•

making appropriate recommendations to

the Board.

Internal Control and

Risk Management

The Directors are ultimately responsible for

the Company’s system of internal controls

and risk management and for reviewing its

effectiveness. Following publication by the

FRC of “Guidance on Risk Management,

Internal Control and Related Financial and

Business Reporting” (the FRC Guidance), the

Directors confirm that there is an ongoing

process for identifying, evaluating and

managing the principal and emerging risks

faced by the Company. This process, which

has been in place for the year under review

and up to the date of approval of this Annual

Report and Financial Statements, is regularly

reviewed by the Board and accords with the

FRC Guidance.

The Directors have, in tandem with VIS,

reviewed the effectiveness of the system of

internal controls and risk management. In

particular, the Directors have reviewed and

updated the process for identifying and

evaluating the principal and emerging risks

affecting the Company and the policies by

which these risks are managed. The significant

risks faced by the Company are as follows:

•

Financial;

•

Operational; and

•

Compliance.

The key components designed to provide

effective internal control are outlined below:

•

Forecasts and management accounts

are prepared which allow the Directors

to assess the Company’s activities and

Report of the Audit and Management

Engagement Committee

Value and Indexed Property Income Trust PLC Annual Report and Financial Statements 2022

Page

55

review its performance; the emphasis is on

obtaining the relevant degree of assurance

and not merely reporting by exception;

•

OLIM Property regularly reports to VIS and

to the Directors on the investment portfolio;

•

OLIM Property’s Compliance Officer

keeps OLIM Property’s operations under

review;

•

VIS regularly reports to the Directors on

compliance with the AIFMD;

•

written agreements are in place which

specifically define the roles and

responsibilities of VIS, OLIM Property and

other third party service providers; and

•

at its first meeting in May 2022, the Audit

and Management Engagement Committee

carried out its annual assessment of

internal controls and risk management

for the year ended 31 March 2022 by

considering documentation from OLIM

Property and Maven Capital Partners UK

LLP and by taking account of events since

31 March 2022.

Internal control systems are designed to meet

the Company’s particular needs and the risks to

which it is exposed. Accordingly, the internal

control systems are designed to manage rather

than eliminate the risk of failure to achieve

business objectives and by their nature can only

provide reasonable and not absolute assurance

against misstatement and loss.

Assessment of Key Risks

The Company’s policy is to invest in directly

held UK commercial property, property-

backed securities listed on the London Stock

Exchange and cash or near cash securities.

As the property portfolio is a significant

element of the Financial Statements, the

recognition and valuation of the property

portfolio is, therefore, a key risk that requires

the particular attention of the Committee.

Specifically, the risk is that investments are

not recognised and measured in line with the

Company’s stated accounting policy on the

valuation of the property portfolio.

Similarly,

as rental income is a major source of revenue

for the Company and a significant element of

the Statement of Comprehensive Income, the

recognition of rental income is a further risk

that requires the particular attention of the

Committee. Further risks relate to the equities

portfolio. The recognition and valuation of

the equities portfolio and the recognition of

dividend income are risks that also require the

attention of the Committee. specifically, the risk

being that dividend income is not recognised

in line with the Company’s stated policy on

income recognition and/or that dividend income

is incorrectly allocated as revenue/capital.

Valuation, Existence

and Ownership of the

Investment Portfolio

– How the Risk was

Addressed

The Company uses the services of an

independent depositary and custodian,

BNP Paribas Securities Services to hold the

equity investments of the Company (the title

deeds for the property portfolio are held

by the Company’s lawyers to the order of

the Company), and for the safekeeping of

the Company’s assets. An annual internal

control report is received from the Depositary

and Custodian which provides details of

the Depositary and Custodian’s control

environment.

The reconciliation of the records held by

the Depositary and Custodian (and by the

Company’s lawyers in the case of the title

deeds) to the records maintained by the

Company’s administrator is reviewed and

tested by the Independent Auditor. The

property and equities portfolio is reviewed

by OLIM Property regularly. Management

accounts, including full portfolio listings,

are prepared quarterly and considered at the

quarterly meetings of the Board.

Value and Indexed Property Income Trust PLC Annual Report and Financial Statements 2022

Page

56

Report of the Audit and Management

Engagement Committee

The valuation of the property and equities

portfolio is undertaken in accordance with the

Company’s stated accounting policy as set out

in Note 1(j) to the Financial Statements on

pages 75 and 76.

The Committee reviews and challenges the

valuation of the investments especially the

investment properties. This includes review of

the valuation report prepared by independent

professional valuers. In addition, the

Committee reviews the Financial Statements

disclosures in line with the reporting

framework.

The Committee satisfied itself that there were

no issues associated with the existence and

ownership of the Company’s investments

which required to be addressed.

Rental And Dividend

Income Recognition – How

the Risk was Addressed

The recognition of rental and dividend income

is undertaken in accordance with accounting

policy Note 1(e) to the Financial Statements

on page 74. The management accounts are

reviewed by the Board on a quarterly basis

and discussion takes place with the Investment

Manager at the quarterly Board Meetings

regarding the revenue generated from rental

and dividend income. The Directors are

satisfied that the levels of income recognised

are in line with revenue estimates. The

Committee concluded that there were no

further issues associated with rental and

dividend income recognition which required to

be addressed.

Review of Investment

Manager and Risk

Reporting

The Committee met three times during the

year under review, twice in May and once

in November 2021. At the first meeting in

May and at the November 2021 meeting, the

Committee considered the key risks detailed

above and the corresponding control and risk

reports provided by the Investment Manager

and the Company Secretary. No significant

weaknesses in the control environment were

identified and it was also noted that there

had not been any adverse comment from

the Auditor and that the Auditor had not

identified any significant issues in its audit

report. The Committee, therefore, concluded

that there were no significant issues which

required to be reported to the Board. At

the second meeting held in May 2021, the

Committee carried out a detailed review of

IFRS 16 and agreed to recommend to the

Board that IFRS 16 be adopted in full.

At its meetings in May 2021, the Committee

also reviewed, for recommendation to the

Board, the Audit Report from the Independent

Auditor and the draft Annual Report and

Financial Statements for the year ended

31 March 2021, along with the amount of the

final dividend for the year then ended. At its

meeting in November 2021, the Committee

reviewed the Half-Yearly Report for the period

to 30 September 2021 and also considered the

performance of BDO LLP as Auditor, and its

independence and tenure.

Subsequent to 31 March 2022, the Committee

considered the draft Annual Report and

Financial Statements for the year ended

31 March 2022, and provided advice to the

Board that it considered that the Annual

Report and Financial Statements, taken as a

whole, is fair, balanced and understandable

and provides the information necessary

for Shareholders to assess the Company’s

position and performance, business model and

strategy. The Committee also reviewed the

performance of the Investment Manager and

the terms and conditions of its appointment

and concluded that the performance of

the Investment Manager was satisfactory

and that the continued appointment of the

Investment Manager was in the best interests

of Shareholders as a whole.

Report of the Audit and Management

Engagement Committee

Value and Indexed Property Income Trust PLC Annual Report and Financial Statements 2022

Page

57

Review of Effectiveness

of External Auditor

As part of its annual review of audit services,

the Committee reviews the performance, cost

effectiveness and general relationship with the

external Auditor (Auditor or BDO LLP).

In addition, the Committee reviews the

independence and objectivity of the Auditor.

Key elements of these reviews include separate

meetings with the Auditor and consideration

of the completeness and accuracy of BDO

LLP’s reporting.

The Auditor’s Report is on pages 58 to 65.

Vanessa-Jayne Bradley of BDO LLP is the

Senior Statutory Auditor responsible for the

audit and BDO LLP will rotate the Senior

Statutory Auditor every five years. Vanessa-

Jayne Bradley was appointed as Senior

Statutory Auditor for the Company during the

year to 31 March 2020 and will be rotated

for the audit for the year to 31 March 2025.

Details of the amounts paid to the Auditor

for audit services are set out in Note 4 to the

Financial Statements.

Shareholders are asked to approve the re-

appointment, and the Directors’ responsibility

for the remuneration, of the Auditor at each

AGM. No non-audit services were provided

to the Company by BDO LLP during the

year under review. There are currently no

contractual obligations which restrict the

Committee’s choice of Auditor.

The Committee is mindful of the requirement

to conduct an audit tender at least every

10 years and to rotate the statutory auditor

after a maximum period of twenty years. The

Committee will continue to keep the matter of

tenure of the Auditor under review.

The Board has concluded that BDO LLP

is independent of the Company and that

a Resolution for the re-appointment of

BDO LLP as Auditor should be put to the

2022 AGM.

David Smith

Director

10 June 2022

Page

58

Value and Indexed Property Income Trust PLC Annual Report and Financial Statements 2022

Independent Auditor’s Report

INDEPENDENT AUDITOR’S

REPORT TO THE MEMBERS

OF VALUE AND INDEXED

PROPERTY INCOME TRUST

PLC

OPINION ON THE

FINANCIAL STATEMENTS

In our opinion the

Financial Statements:

•

give a true and fair view of the state of

the Group’s and of the Parent Company’s

affairs as at 31 March 2022 and of the

Group’s and of the Parent Company’s

profit for the year then ended;

•

have been properly prepared in accordance

with UK adopted international accounting

standards; and

•

have been prepared in accordance with the

requirements of the Companies Act 2006.

We have audited the Financial Statements of

Value and Indexed Property Income Trust PLC

(the ‘Parent Company’) and its subsidiaries

(the ‘Group’) for the year ended 31 March

2022, which comprise the Group Statement

of Comprehensive Income, the Company

Statement of Comprehensive Income, the

Group Statement of Financial Position, the

Company Statement of Financial Position, the

Group Statement of Cash Flows, the Company

Statement of Cash Flows, the Statement

of Changes in Equity and the Notes to the

Financial Statements, including a summary of

significant accounting policies. The financial

reporting framework that has been applied

in their preparation is applicable law and UK

adopted international accounting standards.

Basis for opinion

We conducted our audit in accordance with

International Standards on Auditing (UK) (ISAs

(UK)) and applicable law. Our responsibilities

under those standards are further described in

the Auditor’s responsibilities for the audit of the

Financial Statements section of our report. We

believe that the audit evidence we have obtained

is sufficient and appropriate to provide a basis

for our opinion. Our audit opinion is consistent

with the additional report to the Audit and

Management Engagement Committee.

Independence

Following the recommendation of the Audit

and Management Engagement Committee,

we were appointed by the members of the

Parent Company on 3 September 2020 to audit

the Financial Statements for the year ended

31 March 2020 and subsequent financial

periods. The period of total uninterrupted

engagement including retenders and

reappointments is 3 years, covering the years

ended 31 March 2020 to 31 March 2022.

We remain independent of the Group and the

Parent Company in accordance with the ethical

requirements that are relevant to our audit of

the Financial Statements in the UK, including

the FRC’s Ethical Standard as applied to listed

public interest entities, and we have fulfilled

our other ethical responsibilities in accordance

with these requirements. The non-audit services

prohibited by that standard were not provided to

the Group and the Parent Company.

Conclusions relating to

going concern

In auditing the Financial Statements, we have

concluded that the Directors’ use of the going

concern basis of accounting in the preparation

of the Financial Statements is appropriate. Our

evaluation of the Directors’ assessment of the

Group and the Parent Company’s ability to

continue to adopt the going concern basis of

accounting included:

•

Evaluating the appropriateness of the

Directors’ method of assessing the going

concern in light of property market volatility

and the present uncertainties in economic

recovery by reviewing the information used by

the Directors in completing their assessment;

•

Assessing the appropriateness of the

Directors’ assumptions and judgements

made in their base case and stress

tested forecasts by comparing forecasts

to current year audited amounts and

considering the available cash resources

Page

59

Value and Indexed Property Income Trust PLC Annual Report and Financial Statements 2022

Independent Auditor’s Report

and liquid investments relative to forecast

expenditure and commitments;

•

Obtaining the loan agreements to identify

the covenants and assessing the likelihood of

them being breached based on the Directors’

forecasts and our sensitivity analysis; and

•

Challenging the Directors’ assumptions and

judgements made with regards to forecasts

which included consideration of the covenant

headroom.

Based on the work we have performed,

we have not identified any material

uncertainties relating to events or conditions

that, individually or collectively, may cast

significant doubt on the Group and Parent

Company’s ability to continue as a going

concern for a period of at least twelve months

from when the Financial Statements are

authorised for issue.

In relation to the Parent Company’s reporting

on how it has applied the UK Corporate

Governance Code, we have nothing material

to add or draw attention to in relation to

the Directors’ statement in the Financial

Statements about whether the Directors

considered it appropriate to adopt the going

concern basis of accounting.

Our responsibilities and the responsibilities of

the Directors with respect to going concern are

described in the relevant sections of this report.

Overview

2022

2021

Valuation of investment property

9

9

Group Financial Statements

as a whole

£1.829m (2021: £1.120m)

based on 1% (2021:1%) of

total investment value

100% (2021: 100%)

of Group revenue

100% (2021: 100%)

of Group total assets

Recognition of rental income

9

9

Valuation and ownership of quoted

investments

8

9

We no longer considered the

Valuation and ownership of quoted

investments to be a key audit

matter due to the change in focus

of the Group to be predominantly

investments in property.

An overview of the scope

of our audit

Our Group audit was scoped by obtaining

an understanding of the Group and its

environment, including the Group’s system

of internal control, and assessing the risks

of material misstatement in the Financial

Statements. We also addressed the risk of

management override of internal controls,

including assessing whether there was evidence

of bias by the Directors that may have

represented a risk of material misstatement.

We tailored our audit to ensure we have

performed sufficient work to be able to give

an opinion on the Group Financial Statements

as a whole taking into account the structure

of the Group and its accounting processes and

controls. The Group is based in the United

Kingdom and has one main trading entity, the

Parent Company, Value and Indexed Property

Income Trust PLC, whose principal activity is

that of an Investment Trust. The Group has

one subsidiary, Value and Indexed Property

manager (AIFM) to the Parent Company.

The Group audit engagement team carried out

full scope audits for the Parent Company and

Value and Indexed Property Income Services

Limited, which was not considered to be a

significant component of the Group. Although

not necessary for Group purposes, Value and

Indexed Property Income Services Limited is

audited as it is an FCA Regulated entity.

Page

60

Value and Indexed Property Income Trust PLC Annual Report and Financial Statements 2022

Independent Auditor’s Report

Key audit matters

Key audit matters are those matters that, in

our professional judgement, were of most

significance in our audit of the Financial

Statements of the current period and

include the most significant assessed risks of

material misstatement (whether or not due

to fraud) that we identified, including those

which had the greatest effect on: the overall

audit strategy, the allocation of resources

in the audit, and directing the efforts of

the engagement team. These matters were

addressed in the context of our audit of

the Financial Statements as a whole, and in

forming our opinion thereon, and we do not

provide a separate opinion on these matters.

Valuation of Investment Property

(Note 1 and Note 9)

The Group has opted to carry its investment

properties at fair value rather than cost as permitted

by the accounting standards.

The Group engaged independent external experts,

Savills, to value these properties at the end of the

reporting period.

The valuation uses a cash flow

methodology with key inputs including detailed

data on the underlying assets and the market

environment for each asset. The valuation models

applied are complex and require consideration of

the existing market conditions including yields

and estimates regarding current and future rental

income, occupancy and property management costs.

The Investment Manager’s fee is based on the

value of the Investment properties managed by the

Investment Manager. The Investment Manager is

responsible for reviewing these valuations which

are approved by the Board. Notwithstanding

this review and approval, there is a potential

risk of misstatement in the investment properties

valuations. Investment Properties are Level 3

investments and a highly subjective area.

Due to the level of complexity and assumptions

involved in this area we determined it to be a key

audit matter.

We responded to this matter by testing the valuation

of the portfolio of investment property. We performed

the following procedures:

•

Held discussions with the independent external

valuer engaged by the Group, to understand the

assumptions and methodologies used in valuing

these properties, the market evidence supporting

the valuation assumptions and the valuation

movements in the period.

•

Assessed the competency, independence and

objectivity of the independent external valuer

which included making inquiries regarding

interests and relationships that may have created

a threat to the valuer’s objectivity.

•

Agreed key observable valuation inputs supplied

to and used by the independent external valuer to

supporting documentation. For all the properties

we agreed that the passing rental income and

lease terms agrees to the underlying lease

agreements.

•

With the use of our internal real estate experts,

we evaluated and challenged the valuation

assumptions, methodologies and the inputs

used. This included establishing our own range

of expectations for the valuation of investment

property based on externally available metrics

and wider economic and commercial factors. We

assessed the valuation of all investment properties

against our own expectations and challenged

those valuations which fell outside of our range

of expectation with the use of our internal real

estate experts and obtaining corroborating

evidence from the external valuer.

Key observations

Based on the procedures performed we found the

investment valuations, in particular the assumptions

used, reasonable and did not note any exceptions in

respect of the valuation of investment property.

Page

61

Value and Indexed Property Income Trust PLC Annual Report and Financial Statements 2022

Independent Auditor’s Report

Recognition of rental income

(Note 1 and Note 2)

Rental agreements have fixed rental increases

and RPI increases subject to caps and collars.

The accounting policy states that rental income is

recognised over a straight line basis which means

that any future anticipated rental income is spread

evenly over the term of the lease, giving rise to a

rent smoothing adjustment.

The calculation for the rent smoothing adjustment

can be complex due to the number of leases,

different start and end dates and increase

conditions, and we, therefore, considered this to be

a key audit matter.

We responded to this matter by testing the existence,

accuracy and completeness of rental income. We

performed the following procedures:

•

Obtained Management’s reconciliation of

expected revenue based on the tenancy schedules

to revenue recognised in the Financial Statements

and performed the following:

•

Agreed the rent income received per the

tenancy schedules to the underlying lease

agreements and other documentation such as

rent review memoranda.

•

Checked the integrity of the formulae used

to calculate the expected revenue based on

the tenancy schedule

•

Agreed a sample of reconciling adjustments

between the expected revenue and the

amount recorded in the Financial Statements

to supporting documentation.

•

Confirmed that the tenancy schedule covers

all the Investment Property which has been

valued at the year-end.

•

Confirmed that the rent smoothing

adjustment has been posted correctly in the

financial statements.

Key observations

Based on the procedures performed we consider the

recognition of rental income to be appropriate.

Our application of

materiality

We apply the concept of materiality both in

planning and performing our audit, and in

evaluating the effect of misstatements.

We

consider materiality to be the magnitude by

which misstatements, including omissions,

could influence the economic decisions of

reasonable users that are taken on the basis of

the Financial Statements.

In order to reduce to an appropriately low level

the probability that any misstatements exceed

materiality, we use a lower materiality level,

performance materiality, to determine the extent

of testing needed. Importantly, misstatements

below these levels will not necessarily be

evaluated as immaterial as we also take account

of the nature of identified misstatements, and

the particular circumstances of their occurrence,

when evaluating their effect on the Financial

Statements as a whole.

Page

62

Value and Indexed Property Income Trust PLC Annual Report and Financial Statements 2022

Independent Auditor’s Report

Based on our professional judgement, we determined materiality for the Financial Statements as a

whole and performance materiality as follows:

1,829

1,120

1,827

1,118

1% of total investment value (2021: 1%

of total investment value)

99.89% of Group materiality (2021: 99.82%

of Group materiality)

As an Investment Trust, the

value of investments is the key measure

of performance.

Percentage of Group materiality for Group

reporting purposes given the assessment of

aggregation risk

1,190

728

1,188

726

65% of materiality (2021: 65% of materiality) based on the historical and

anticipated level of errors and management’s attitude to proposed adjustments

Specific materiality

We also determined that for Revenue return

before tax, a misstatement of less than

materiality for the Financial Statements as a

whole, specific materiality, could influence the

economic decisions of users as it is a measure of

the Group’s performance of income generated

from its investments after expenses. As a result,

we determined materiality for these items to

be £219,000 (2021: 243,000), based on 10%

of Revenue return before tax (2021: 8.75% of

Revenue return before tax). We further applied

a performance materiality level of 65% (2021:

65%) of specific materiality to ensure that the

risk of errors exceeding specific materiality was

appropriately mitigated.

Component materiality

Materiality for the Parent Company, which was

the only significant component, is set out in the

table above.

Reporting threshold

We agreed with the Audit and Management

Engagement Committee that we would report

to them all individual audit differences in excess

of £11,000 (2021: £12,000).

We also agreed

to report differences below this threshold that,

in our view, warranted reporting on qualitative

grounds.

Other information

The Directors are responsible for the other

information. The other information comprises

the information included in the Annual

Report and Accounts other than the Financial

Statements and our Auditor’s Report thereon.

Our opinion on the Financial Statements

does not cover the other information and,

except to the extent otherwise explicitly

stated in our report, we do not express any

form of assurance conclusion thereon. Our

responsibility is to read the other information

and, in doing so, consider whether the other

information is materially inconsistent with

the Financial Statements or our knowledge

obtained in the course of the audit, or

otherwise appears to be materially misstated.

If we identify such material inconsistencies

or apparent material misstatements, we are

required to determine whether this gives rise

to a material misstatement in the Financial

Statements themselves. If, based on the work

we have performed, we conclude that there is a

material misstatement of this other information,

we are required to report that fact.

We have nothing to report in this regard.

Page

63

Value and Indexed Property Income Trust PLC Annual Report and Financial Statements 2022

Independent Auditor’s Report

Corporate governance

statement

The Listing Rules require us to review the

Directors’ statement in relation to going

concern, longer-term viability and that part of

the Corporate Governance Statement relating

to the Parent Company’s compliance with the

provisions of the UK Corporate Governance

Code specified for our review.

Based on the work undertaken as part of

our audit, we have concluded that each of

the following elements of the Corporate

Governance Statement is materially consistent

with the Financial Statements or our knowledge

obtained during the audit.

•

The Directors’ statement with regards to the

appropriateness of adopting the going concern

basis of accounting and any material uncertainties

identified; and

•

The Directors’ explanation as to their

assessment of the Group’s prospects, the period

this assessment covers and why the period is

appropriate.

•

Directors’ statement on fair, balanced and

understandable;

•

Board’s confirmation that it has carried out a robust

assessment of the emerging and principal risks;

•

The section of the Annual Report that describes

the review of effectiveness of risk management and

internal control systems; and

•

The section describing the work of the Audit and

Management Engagement Committee.

Other Companies Act 2006 reporting

Based on the responsibilities described below and our work performed during the course of the

audit, we are required by the Companies Act 2006 and ISAs (UK) to report on certain opinions and

matters as described below.

In our opinion, based on the work undertaken in the course of the audit:

•

the information given in the Strategic Report and the Directors’ Report for the

financial year for which the Financial Statements are prepared is consistent with

the Financial Statements; and

•

the Strategic Report and the Directors’ Report have been prepared in accordance

with applicable legal requirements.

In the light of the knowledge and understanding of the Group and Parent Company

and its environment obtained in the course of the audit, we have not identified material

misstatements in the strategic report or the Directors’ Report.

In our opinion, the part of the Directors’ Remuneration Report to be audited has been

properly prepared in accordance with the Companies Act 2006.

We have nothing to report in respect of the following matters in relation to which the

Companies Act 2006 requires us to report to you if, in our opinion:

•

adequate accounting records have not been kept by the Parent Company, or

returns adequate for our audit have not been received from branches not visited

by us; or

•

the Parent Company Financial Statements and the part of the Directors’

Remuneration Report to be audited are not in agreement with the accounting

records and returns; or

•

certain disclosures of Directors’ remuneration specified by law are not made; or

•

we have not received all the information and explanations we require for our audit.

Page

64

Value and Indexed Property Income Trust PLC Annual Report and Financial Statements 2022

Independent Auditor’s Report

Responsibilities of

Directors

As explained more fully in the Statement of

Directors’ Responsibilities, the Directors are

responsible for the preparation of the Financial

Statements and for being satisfied that they

give a true and fair view, and for such internal

control as the Directors determine is necessary

to enable the preparation of Financial

Statements that are free from material

misstatement, whether due to fraud or error.

In preparing the Financial Statements, the

Directors are responsible for assessing the

Group’s and the Parent Company’s ability

to continue as a going concern, disclosing,

as applicable, matters related to going

concern and using the going concern basis of

accounting unless the Directors either intend

to liquidate the Group or the Parent Company

or to cease operations, or have no realistic

alternative but to do so.

Auditor’s responsibilities

for the audit of the

Financial Statements

Our objectives are to obtain reasonable

assurance about whether the Financial

Statements as a whole are free from material

misstatement, whether due to fraud or error,

and to issue an auditor’s report that includes

our opinion. Reasonable assurance is a high

level of assurance, but is not a guarantee

that an audit conducted in accordance with

ISAs (UK) will always detect a material

misstatement when it exists. Misstatements

can arise from fraud or error and are

considered material if, individually or in the

aggregate, they could reasonably be expected

to influence the economic decisions of

users taken on the basis of these Financial

Statements.

Extent to which the audit

was capable of detecting

irregularities, including fraud

Irregularities, including fraud, are

instances of non-compliance with laws and

regulations. We design procedures in line

with our responsibilities, outlined above, to

detect material misstatements in respect of

irregularities, including fraud. The extent to

which our procedures are capable of detecting

irregularities, including fraud is detailed

below:

We gained an understanding of the legal

and regulatory framework applicable to the

Group and the industry in which it operates,

and considered the risk of acts by the Group

and Parent Company which were contrary

to applicable laws and regulations, including

fraud. We considered the significant laws and

regulations to be the Companies Act 2006,

the FCA listing and DTR rules, the principles

of the AIC Code of Corporate Governance,

industry practice represented by the AIC

SORP, the applicable accounting framework,

and the Parent Company’s qualification as an

Investment Trust under UK tax legislation as

any non-compliance of this would lead to the

Parent Company losing various deductions

and exemptions from corporation tax.

We focused on laws and regulations that could

give rise to a material misstatement in the

Financial Statements. Our tests included:

•

agreement of the financial statement

disclosures to underlying supporting

documentation;

•

enquiries of management and those

charged with governance relating to the

existence of any non-compliance with laws

and regulations;

•

review of minutes of board meetings

throughout the period for the existence

of any non-compliance with laws and

regulations;

•

obtaining an understanding of the control

environment in monitoring compliance

with laws and regulations; and

Page

65

Value and Indexed Property Income Trust PLC Annual Report and Financial Statements 2022

Independent Auditor’s Report

•

reviewing the calculation in relation to

Investment Trust compliance to check

that the Parent Company was meeting

its requirements to retain its Investment

Trust status.

We assessed the susceptibility of the financial

statement to material misstatement including

fraud and considered the fraud risk areas to

be the valuation of investment property and

management override of controls.

Our tests included:

•

The procedures set out in the Key Audit

Matters section above;

•

Recalculating investment management fees

in total;

•

Obtaining independent confirmation of

bank balances; and

•

Testing journals which met a defined

risk criteria by agreeing to supporting

documentation and evaluating whether

there was evidence of bias by the

Investment Manager and Directors that

represented a risk of material misstatement

due to fraud.

We also communicated relevant identified laws

and regulations and potential fraud risks to all

engagement team members and remained alert

to any indications of fraud or non-compliance

with laws and regulations throughout the

audit.

Our audit procedures were designed to respond

to risks of material misstatement in the

Financial Statements, recognising that the risk

of not detecting a material misstatement due

to fraud is higher than the risk of not detecting

one resulting from error, as fraud may involve

deliberate concealment by, for example, forgery,

misrepresentations or through collusion.

There are inherent limitations in the audit

procedures performed and the further removed

non-compliance with laws and regulations is

from the events and transactions reflected in the

Financial Statements, the less likely we are to

become aware of it.

A further description of our responsibilities

is available on the Financial Reporting

Council’s website at:

www.frc.org.uk/

auditorsresponsibilities.

This description forms

part of our Auditor’s Report.

Use of our report

This report is made solely to the Parent

Company’s members, as a body, in accordance

with Chapter 3 of Part 16 of the Companies

Act 2006. Our audit work has been

undertaken so that we might state to the Parent

Company’s members those matters we are

required to state to them in an auditor’s report

and for no other purpose.

To the fullest extent

permitted by law, we do not accept or assume

responsibility to anyone other than the Parent

Company and the Parent Company’s members

as a body, for our audit work, for this report,

or for the opinions we have formed.

Vanessa-Jayne Bradley

(Senior Statutory Auditor)

For and on behalf of BDO LLP, Statutory Auditor

London, UK

10 June 2022

BDO LLP is a limited liability partnership registered

in England and Wales (with registered number

OC305127).

Value and Indexed Property Income Trust PLC Annual Report and Financial Statements 2022

Page

66

Group Statement of Comprehensive Income

For the year ended 31 March

INCOME

Rental income

2

5,647

–

5,647

5,359

–

5,359

Investment income

2

1,682

–

1,682

3,414

–

3,414

Other income

2

–

–

–

159

–

159

7,329

–

7,329

8,932

–

8,932

GAINS ON INVESTMENTS

Realised gains on held-at-fair-

value investments and investment

properties

9

10,440

10,440

–

8,588

8,588

Unrealised gains on held-at-fair-

value investments and investment

properties

9

–

8,797

8,797

–

1,185

1,185

TOTAL INCOME

7,329

19,237

26,566

8,932

9,773

18,705

EXPENSES

Investment management fees

3

(1,088)

(2)

(1,090)

(301)

(702)

(1,003)

Other operating expenses

4

(870)

–

(870)

(771)

–

(771)

FINANCE COSTS

5

(3,177)

–

(3,177)

(5,084)

–

(5,084)

TOTAL EXPENSES

(5,135)

(2)

(5,137)

(6,156)

(702)

(6,858)

PROFIT BEFORE TAXATION

2,194

19,235

21,429

2,776

9,071

11,847

TAXATION

6

(321)

3,154

2,833

(359)

1,132

773

PROFIT ATRIBUTABLE TO EQUITY

SHAREHOLDERS OF PARENT

COMPANY

1,873

22,389

24,262

2,417

10,203

12,620

EARNINGS PER ORDINARY

SHARE (PENCE)

7

4.30

51.40

55.70

5.35

22.56

27.91

The total column of this statement represents the Statement of Comprehensive Income of the Group,

prepared in accordance with IFRS. The revenue return and capital return columns are supplementary

to this and are prepared under guidance published by the Association of Investment Companies. All

items in the above statement derive from continuing operations.

The Group does not have any other comprehensive income and so the total profit, as disclosed

above, is the same as the Group’s total comprehensive income. All income is attributable to the equity

holders of Value and Indexed Property Income Trust PLC, the parent company. There are no minority

interests.

The Notes on pages 73 to 95 form part of these Financial Statements.

Value and Indexed Property Income Trust PLC Annual Report and Financial Statements 2022

Page

67

Company Statement of Comprehensive Income

For the year ended 31 March

INCOME

Rental income

2

5,647

–

5,647

5,359

–

5,359

Investment income

2

1,682

–

1,682

3,414

–

3,414

Other income

2

–

–

–

159

–

159

7,329

–

7,329

8,932

–

8,932

GAINS AND LOSSES ON INVESTMENTS

Realised gains on held-at-fair-

value investments and investment

properties

9

–

10,440

10,440

–

8,588

8,588

Unrealised gains on held-at-fair-

value investments and investment

properties

9

–

8,797

8,797

–

1,781

1,781

TOTAL INCOME

7,329

19,237

26,566

8,932

10,369

19,301

EXPENSES

Investment management fees

3

(1,088)

(2)

(1,090)

(301)

(702)

(1,003)

Other operating expenses

4

(870)

–

(870)

(771)

–

(771)

FINANCE COSTS

5

(3,177)

–

(3,177)

(5,050)

–

(5,050)

TOTAL EXPENSES

(5,135)

(2)

(5,137)

(6,122)

(702)

(6,824)

PROFIT BEFORE TAXATION

2,194

19,235

21,429

2,810

9,667

12,477

TAXATION

6

(321)

3,154

2,833

(359)

1,132

773

PROFIT ATRIBUTABLE TO EQUITY

SHAREHOLDERS OF PARENT

COMPANY

1,873

22,389

24,262

2,451

10,799

13,250

EARNINGS PER ORDINARY

SHARE (PENCE)

7

4.30

51.40

55.70

5.42

23.88

29.30

The total column of this statement represents the Statement of Comprehensive Income of the

Company prepared in accordance with IFRS. The revenue return and capital return columns are

supplementary to this and are prepared under guidance published by the Association of Investment

Companies. All items in the above statement derive from continuing operations.

The Company does not have any other comprehensive income and so the total profit, as disclosed

above, is the same as the Company’s total comprehensive income.

The Notes on pages 73 to 95 form part of these Financial Statements.

Value and Indexed Property Income Trust PLC Annual Report and Financial Statements 2022

Page

68

Group Statement of Financial Position

As at 31 March

ASSETS

NON CURRENT ASSETS

Investment properties

9

155,838

81,132

Investments held at fair value through

profit or loss

9

26,871

28,581

182,709

109,713

Deferred tax asset

6

4,091

1,258

Receivables

10

2,238

2,017

189,038

112,988

CURRENT ASSETS

Cash and cash equivalents

5,153

65,965

Receivables

10

4,709

972

9,862

66,937

TOTAL ASSETS

198,900

179,925

CURRENT LIABILITIES

Payables

11

(2,423)

(2,318)

(2,423)

(2,318)

TOTAL ASSETS LESS CURRENT LIABILITIES

196,477

177,607

NON-CURRENT LIABILITIES

Payables

12

(2,854)

(2,862)

Borrowings

12

(56,723)

(56,662)

(59,577)

(59,524)

NET ASSETS

136,900

118,083

EQUITY ATTRIBUTABLE TO EQUITY

SHAREHOLDERS

Called up share capital

14

4,555

4,555

Share premium

15

18,446

18,446

Retained earnings

16

113,899

95,082

TOTAL EQUITY

136,900

118,083

NET ASSET VALUE PER ORDINARY SHARE (PENCE)

17

314.30

271.10

These Financial Statements were approved by the Board on 10 June 2022 and were signed on its

behalf by:-

JAMES FERGUSON, CHAIRMAN

The Notes on pages 73 to 95 form part of these Financial Statements.

Value and Indexed Property Income Trust PLC Annual Report and Financial Statements 2022

Page

69

Company Statement of Financial Position

As at 31 March

ASSETS

NON CURRENT ASSETS

Investment properties

9

155,838

81,132

Investments held at fair value through

profit or loss

9

27,071

28,781

182,909

109,913

Deferred tax asset

6

4,091

1,258

Receivables

10

2,238

2,017

189,238

113,188

CURRENT ASSETS

Cash and cash equivalents

4,953

65,765

Receivables

10

4,709

972

9,662

66,737

TOTAL ASSETS

198,900

179,925

CURRENT LIABILITIES

Payables

11

(2,423)

(2,318)

(2,423)

(2,318)

TOTAL ASSETS LESS CURRENT LIABILITIES

196,477

177,607

NON-CURRENT LIABILITIES

Payables

12

(2,854)

(2,862)

Borrowings

12

(56,723)

(56,662)

(59,577)

(59,524)

NET ASSETS

136,900

118,083

EQUITY ATTRIBUTABLE TO EQUITY

SHAREHOLDERS

Called up share capital

14

4,555

4,555

Share premium

15

18,446

18,446

Retained earnings

16

113,899

95,082

TOTAL EQUITY

136,900

118,083

NET ASSET VALUE PER ORDINARY SHARE (PENCE)

17

314.30

271.10

These Financial Statements were approved by the Board on 10 June 2022 and were signed on its

behalf by:-

JAMES FERGUSON, CHAIRMAN

The Notes on pages 73 to 95 form part of these Financial Statements.

Value and Indexed Property Income Trust PLC Annual Report and Financial Statements 2022

Page

70

Group Statement of Cashflows

For the year ended 31 March

Cash flows from operating activities

Rental income received

5,970

5,218

Dividend income received

1,835

3,486

Interest (paid)/received

(1)

244

Operating expenses paid

(1,914)

(1,673)

NET CASH INFLOW FROM OPERATING ACTIVITIES

18

5,890

7,275

Cash flows from investing activities

Purchase of investments held at fair value

through profit or loss

(30,132)

(4,500)

Purchase of investment properties

(63,412)

(17,553)

Sale of investments held at fair value through

profit or loss

32,042

79,584

Sale of investment properties

3,445

4,725

NET CASH (OUTFLOW)/INFLOW

FROM INVESTING ACTIVITIES

(58,057)

62,256

Cash flow from financing activities

Repayment of debenture stock

–

(15,000)

Fees paid on new loan

–

(4)

Interest paid on loans

(3,113)

(4,938)

Finance cost of leases

(78)

(191)

Payments of lease liabilities

(9)

(17)

Dividends paid

8

(5,445)

(5,512)

Buyback of Ordinary Shares for Treasury

14

–

(4,332)

NET CASH OUTFLOW FROM FINANCING ACTIVITIES

(8,645)

(29,994)

NET (DECREASE)/INCREASE IN CASH AND CASH

EQUIVALENTS

(60,812)

39,537

Cash and cash equivalents at 1 April 2021

65,965

26,428

CASH AND CASH EQUIVALENTS

AT 31 MARCH 2022

5,153

65,965

The Notes on pages 73 to 95 form part of these Financial Statements.

Value and Indexed Property Income Trust PLC Annual Report and Financial Statements 2022

Page

71

Company Statement of Cashflows

For the year ended 31 March

Cash flows from operating activities

Rental income received

5,970

5,218

Dividend income received

1,835

3,486

Interest (paid)/received

(1)

244

Operating expenses paid

(1,914)

(1,673)

NET CASH INFLOW FROM OPERATING ACTIVITIES

18

5,890

7,275

Cash flows from investing activities

Purchase of investments held at fair value

through profit or loss

(30,132)

(4,500)

Purchase of investment properties

(63,412)

(17,553)

Sale of investments held at fair value through

profit or loss

32,042

79,584

Sale of investment properties

3,445

4,725

NET CASH (OUTFLOW)/INFLOW

FROM INVESTING ACTIVITIES

(58,057)

62,256

Cash flow from financing activities

Repayment of debenture stock

–

(15,000)

Fees paid on new loan

–

(4)

Interest paid on loans

(3,113)

(4,938)

Finance cost of leases

(78)

(157)

Payments of lease liabilities

(9)

(51)

Dividends paid

8

(5,445)

(5,512)

Buyback of Ordinary Shares for Treasury

14

–

(4,332)

NET CASH OUTFLOW FROM FINANCING ACTIVITIES

(8,645)

(29,994)

NET (DECREASE)/INCREASE IN CASH AND CASH

EQUIVALENTS

(60,812)

39,537

Cash and cash equivalents at 1 April 2021

65,765

26,228

CASH AND CASH EQUIVALENTS

AT 31 MARCH 2022

4,953

65,765

The Notes on pages 73 to 95 form part of these Financial Statements.

Value and Indexed Property Income Trust PLC Annual Report and Financial Statements 2022

Page

72

Statement of Changes in Equity

For the year ended 31 March

GROUP

Net assets at 31 March 2021

4,555

18,446

95,082

118,083

Profit for the year

–

–

24,262

24,262

Dividends paid

8

–

–

(5,445)

(5,445)

Net assets at 31 March 2022

4,555

18,446

113,899

136,900

COMPANY

Net assets at 31 March 2021

4,555

18,446

95,082

118,083

Profit for the year

–

–

24,262

24,262

Dividends paid

8

–

–

(5,445)

(5,445)

Net assets at 31 March 2022

4,555

18,446

113,899

136,900

GROUP

COMPANY

The Notes on pages 73 to 95 form part of these Financial Statements.

Notes to the Financial Statements

Value and Indexed Property Income Trust PLC Annual Report and Financial Statements 2022

Page

73

1

Accounting policies

The Financial Statements have been prepared in accordance with UK adopted international accounting

standards.

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 as disclosed on page 36

and on the historical cost basis, except for the revaluation of equities, investment properties

and investment in subsidiaries, all of which are valued at fair value through profit and loss. The

principal accounting policies adopted are set out below. Where presentational guidance set out

in the Statement of Recommended Practice

Financial Statements of Investment Trust Companies

and Venture Capital Trusts

(the SORP) issued by the Association of Investment Companies (AIC)

in April 2021 is consistent with the requirements of IFRS, the Directors have sought to prepare

the Financial Statements on a basis compliant with the recommendations of the SORP, except for

the allocation of finance costs to revenue as explained in Note 1(f).

The Board has considered the requirements of IFRS 8, ‘Operating Segments’. The Board is

charged with setting the Group’s investment strategy. The Board has delegated the day to day

implementation of this strategy to the Investment Manager but the Board retains responsibility

to ensure that adequate resources of the Group are directed in accordance with its decisions. The

Board is of the view that the Group is engaged in a single segment of business, being investments

in 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 reports from the Investment Manager on

pages 4 to 24.

(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 on pages 2 to 34. The financial position

of the Group as at 31 March 2022 is shown in the Statement of Financial Position on page 68.

The cash flows of the Group for the year ended 31 March 2022 are set out on page 70. The

Group had fixed debt totalling £56,723,000 as at 31 March 2022, as set out in Notes 11 and

12 on pages 84 to 86; none of the borrowings is repayable before March 2026. Note 21 on

pages 89 to 94 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 2022, the Group’s total

assets less current liabilities exceeded its total non current liabilities by a factor of over two.

The assets of the Group consist mainly of securities and investment properties that are held in

accordance with the Group’s investment policy, as set out on page 27. 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 and having taken into account the liquidity of the Group’s

investment portfolio and the Group’s financial position in respect of cash flows, borrowing

facilities, the intention to repay the debenture early, and investment commitments (of which there

Notes to the Financial Statements

1

Accounting policies – continued

Value and Indexed Property Income Trust PLC Annual Report and Financial Statements 2022

Page

74

is none of significance), are not aware of any material uncertainties that may cast significant

doubt upon the Group’s ability to continue as a going concern. Accordingly, the Directors believe

that it is appropriate to continue to adopt the going concern basis in preparing the Financial

Statements.

(c)

Basis of consolidation

The consolidated Financial Statements incorporate the Financial Statements of the Company

and the entity controlled by the Company (its subsidiary). An investor controls an investee when

it is exposed, or has rights, to variable returns from its involvement with the investee and has

ability to affect those returns through its power over the investee. The Company consolidates

the investee that it controls. All intra-group transactions, balances, income and expenses are

eliminated on consolidation. The investment in the subsidiary is recognised at fair value in

the Financial Statements of the Company. This is considered to be the net asset value of the

Shareholders’ funds, as shown in its Statement of Financial Position.

Value and Indexed Property Income Services Limited is a private limited company incorporated

in Scotland under company number SC467598. It is a wholly owned subsidiary of the Company

and has been appointed to act as Alternative Investment Fund Manager of the Company.

(d)

Presentation of Statement of Comprehensive Income

In order to reflect better the activities of an investment trust company and in accordance

with guidance issued by the AIC, supplementary information which analyses the Statement

of Comprehensive Income between items of a revenue and capital nature has been presented

alongside the Statement of Comprehensive Income. In accordance with the Company’s Articles,

net realised capital returns may be distributed by way of dividend.

Additionally, the net revenue is the measure that the Directors believe to be appropriate in

assessing the Company’s compliance with certain requirements set out in sections 1158-1160 of

the Corporation Tax Act 2010.

(e)

Income

Dividend income from investments is recognised as revenue for the period on an ex-dividend

basis. Where no ex-dividend date is available, dividends receivable on or before the period end

are treated as revenue for the period.

Where the Group has elected to receive dividend income in the form of additional shares rather

than cash, the amount of cash dividend foregone is recognised as income. Any excess in the

value of shares received over the amount of cash dividend foregone is recognised as a gain in the

income statement.

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

of the period.

Rental receivable and lease incentives, where material, from investment properties under

operating leases are recognised in the Statement of Comprehensive Income over the term of the

lease on a straight line basis. Other income is recognised on an accruals basis.

Notes to the Financial Statements

1

Accounting policies – continued

Value and Indexed Property Income Trust PLC Annual Report and Financial Statements 2022

Page

75

(f)

Expenses and Finance Costs

All expenses and finance costs are accounted for on an accruals basis. Expenses are presented as

capital where a connection with the maintenance or enhancement of the value of investments can

be demonstrated. In this respect, and in accordance with the SORP, the investment management

fees have been allocated, 100% to revenue for the year ended 31 March 2022 (previously 30% to

revenue and 70% to capital) to reflect the Board’s expectations of long-term investment returns.

It is normal practice, and in accordance with the SORP, for investment trust companies to allocate

finance costs to capital on the same basis as the investment management fee allocation. However,

as the Company has a significant exposure to property, and property companies allocate finance

costs to revenue to match rental income, the Directors consider that, contrary to the SORP, it is

inappropriate to allocate finance costs to capital.

(g)

Receivables and Payables

Receivables do not carry any interest and are stated at their nominal value, as reduced by any

impairment calculated using an expected credit loss model. 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 more probable than

not that there will be suitable profits from which the future reversal of the temporary differences

can be deducted.

Due to the Company’s status as an investment trust company, and the intention to continue to

meet the conditions required to maintain approval for the foreseeable future, the Company has

not provided deferred tax on any capital gains and losses arising on the revaluation or disposal

of investments.

(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 equity investments are classified on the basis of their contractual cashflow characteristics

and the Group’s business model for managing its assets. The business model, which is

the determining feature, is such that the portfolio of equity investments is managed, and

performance is evaluated, on the basis of fair value. Consequently, all equity investments are

measured at fair value through profit or loss.

Notes to the Financial Statements

1

Accounting policies – continued

Value and Indexed Property Income Trust PLC Annual Report and Financial Statements 2022

Page

76

For listed investments, fair value through profit or loss 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

is included within the book cost of the property.

After initial recognition, investment properties are measured at fair value. Gains and losses

arising from changes in fair value are included in net profit or loss for the period as a capital

item in the Statement of Comprehensive Income and are ultimately recognised in the retained

earnings.

As disclosed in Note 21, the Group leases out all of its properties on operating leases. An

operating lease is a lease that does not transfer substantially all the risks and rewards incidental

to ownership of an underlying asset. A property held under an operating lease is classified

and accounted for as an investment property where the Group holds it to earn rental, capital

appreciation or both. Any such property leased under an operating lease is carried at fair value.

Fair value is established by half-yearly professional valuation on an open market basis by Savills

(UK) Limited, Chartered Surveyors and Valuers, and in accordance with the RICS Valuation -

Global Standards January 2020 (the ‘RICS Red Book’). The determination of fair value by Savills

is supported by market evidence, excluding prepaid or accrued operating lease income arising

from the spreading of lease incentives or minimum lease payments because it has been recognised

as a separate liability or asset. The fair value of investment property held by a lessee as a right-

of-use asset reflects expected cash flows (including variable lease payments that are expected

to become payable). Accordingly, if a valuation obtained for a property is net of all payments

expected to be made, it will be necessary to add back any recognised lease liability, to arrive at

the carrying amount of the investment property using the fair value model. These valuations are

disclosed in Note 9 on pages 82 to 84.

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 that are repayable on demand.

(l)

Non - current liabilities

All new loans and borrowings are initially measured at cost, being the fair value of the

consideration received, less issue costs where applicable. Thereafter, all interest-bearing loans and

borrowings are subsequently measured at amortised cost. Amortised cost is calculated by taking

into account any discount or premium on settlement. The costs of arranging any interest-bearing

loans are capitalised and amortised over the life of the loan. When the term of a loan is modified,

the amortisation of costs is adjusted in line.

Notes to the Financial Statements

1

Accounting policies – continued

Value and Indexed Property Income Trust PLC Annual Report and Financial Statements 2022

Page

77

(m)

Leases

The Group leases properties that meet the definition of investment property. These right-of-use

assets are presented as part of Investments Properties in the Statement of Financial Position

and held at fair-value. All properties are leased out under operating leases and rental income is

recognised on a straight line basis over the expected term of the relevant lease. Many leases have

fixed or minimum rental uplifts and rental income is recognised on a straight line basis over the

expected term of the lease.

(n)

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 2022 is disclosed in Note 9 to the Financial Statements on pages 82 to 84.

(o)

Adoption of new and revised Accounting Standards

The following new and revised Standards and Interpretations became effective during the year

and had no material impact on the amounts reported in these Financial Statements but may

impact accounting for future transactions and arrangements.

Standards

IFRS 16 Amendments - Covid 19-Related Rent Concessions (effective 1 June 2020)

IAS 39, IFRS 4, 7, 9 and 16 Amendments - Interest Benchmark Reform Phase 2 (effective

1 January 2021)

IFRS 16 Amendments - Covid-19 Related Rent Concessions beyond 30 June 2021 (effective

1 April 2021)

At the date of authorisation of these Financial Statements, the following Standards and

interpretations, which have not been applied to these Financial Statements, were in issue but

were not yet effective.

Standards

IAS 1 Amendments - Classification of Liabilities as Current or Non-Current (effective 1 January

2023)

IAS 1 Amendments - Disclosure of Accounting Policies (effective 1 January 2023)

IAS 8 Amendments - Definition of Accounting Estimates (effective 1 January 2023)

IAS 12 Amendments - Deferred Tax related to Assets and Liabilities arising from a Single

Transaction (effective 1 January 2023)

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.

Notes to the Financial Statements

Value and Indexed Property Income Trust PLC Annual Report and Financial Statements 2022

Page

78

2

Income

Investment income

Dividends from listed investments in UK

1,682

1,682

3,414

3,414

Other operating income

Rental income

5,647

5,647

5,359

5,359

Interest receivable on short term deposits

–

–

159

159

Total income

7,329

7,329

8,932

8,932

3

Investment management fee

Group and Company

Investment management fee

1,088

2

1,090

301

702

1,003

A summary of the terms of the management agreement is given on page 39 of the Directors’ Report.

In November 2020, OLIM gave notice of its intention to wind up its operations in early 2021. As a result, the

investment management agreement with OLIM ceased with effect from 28 February 2021 and responsibility

for the management of the equity portfolio moved to OLIM Property Limited.

From 1st April 2021 the management fee has been allocated 100% to revenue (previously 30% to revenue,

70% to capital).

OLIM Property Limited received an investment management fee of £1,090,000

(2021 - £479,000)

, the

basis of calculation of which is given on page 39.

OLIM Limited received an investment management fee of £nil

(2021 - £524,000)

.

4

Other operating expenses

Fee payable to the Company’s auditor for the

audit of the Company’s accounts