VALUE AND INDEXED PROPERTY INCOME TRUST PLC

ANNUAL FINANCIAL REPORT

FOR THE YEAR ENDED 31 MARCH 2024

Strategic Report

Chairman’s Statement

The Company’s capital performance was disappointing last year, with a net asset value total return of -9.7%. The discount to net asset value also widened, resulting in a share price total return of -10.3%. Since our year end on 31 March 2024, however, the share price has rebounded and the discount narrowed again. Rental income growth was well above inflation last year, and since the year end, 100% of rent has become index-related.

The weakness of the property market is principally the result of the abrupt end of the extended era of exceptionally low interest rates which followed the global financial crisis. Central Banks around the world have been indicating that the next moves in rates are more likely to be down than up. But we should expect a return to historical normality rather than a resumption of the near zero cost bank financing.

As a result, there are some indications that the worst is over for property, although confidence is still fragile and transaction volumes are low. The election in Britain, which will take place on July 4, may result in a degree of political stability which has been missing for most of the current Parliament. It is difficult to maintain similar hopes for the outcome of the US Presidential contest in November. In both countries, fiscal projections bear little relation to reality. The geopolitical uncertainties which contributed to the rise in inflation and consequent increase in interest rates have compounded. The war in Ukraine continues and hostilities have ravaged Palestine. The ambitions of China’s leaders are a growing source of tension and concern.

While no asset classes are immune from these factors, the Company’s portfolio of UK property assets with good locations, strong covenants and rents linked to inflation is well positioned to be robust to external events. During the year, the portfolio was strengthened with the purchase of three long-let leisure investments at yields over 8%, and the sale of seven weaker properties including the last Stonegate pub holdings. That company has since announced it is seeking to refinance its debts. All the remaining tenants appear well financed. All rent due in the last year was collected in full.

We continue to improve the sustainability credentials of our properties, post year end 100% of all Energy Performance Certificates are now A – C. All rent due in the last year was collected in full.

A major restructuring of the Company’s debt was completed last year with the repayment of the costly debenture and the Company now has a comfortable loan to value position locked in at affordable interest rates.

Underlying income growth was strong with 11 rent reviews adding 4.9% to total rental income. As the revised name of the Company, adopted in 2021 emphasises, our focus is on achieving value from secure indexed property income.

At the year end, the yield on the Company’s shares (at the proposed dividend) was 7.7% as against 0.1% on the UK Government’s 2031 indexed gilt, which is linked to the Retail Prices Index (RPI).

Some of the rents on VIP’s properties are linked to the RPI, others to the slightly slower rising Consumer Prices Index (CPI), which is the basis for the 2% target prescribed for the Bank of England. The Company’s index-related rent reviews should make it well placed to at least match inflation now it is nearer to the official target.

As anticipated, dividend cover has now been restored and the Board aims to maintain the Company’s thirty-seven year history of progressive dividend increases. The Board is recommending a final dividend of 3.6p per share, making total dividends of 13.2p per share for the year to 31 March 2024, compared to 12.9p in the previous year, an increase of 2.3%. Subject to Shareholder approval at the 2024 Annual General Meeting (AGM), the final dividend will be paid on 26 July 2024 to Shareholders on the register on 28 June 2024. The ex-dividend date is 27 June 2024.

John Kay

Chairman