Half-year Report
02/05/2024 18:16
BlackRock Greater Europe Investment Trust plc
LEI: 5493003R8FJ6I76ZUW55
Half Yearly Financial Report 29 February 2024
Performance record
As at As at
29 February 31 August
2024 2023
Net assets (£’000) 1 662,619 565,710
Net asset value per ordinary share (pence) 658.25 560.11
Ordinary share price (mid-market) (pence) 629.00 527.00
Discount to cum income net asset value 2 4.4% 5.9%
FTSE World Europe ex UK Index 2,100.60 1,916.71
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For the six For the six
months ended months ended
29 February 28 February
2024 2023
Performance (with dividends reinvested)
Net asset value per share 2 18.6% 16.6%
Ordinary share price 2 20.5% 15.9%
FTSE World Europe ex UK Index 9.6% 14.6%
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For the period For the period
since inception since inception
to 29 February to 28 February
2024 2023
Performance since inception (with dividends reinvested)
Net asset value per share 2 814.2% 654.1%
Ordinary share price 2 784.3% 626.0%
FTSE World Europe ex UK Index 431.2% 379.7%
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For the six For the six Change
months ended months ended %
29 February 28 February
2024 2023
Revenue
Net profit on ordinary activities after taxation (£’000) 63 22 +186.4
Revenue earnings per ordinary share (pence) 3 0.06 0.02 +200.0
Dividends (pence)
Interim dividend 1.75 1.75 -
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1 The change in net assets reflects payments for shares repurchased into
treasury, portfolio movements and dividends paid.
2 Alternative Performance Measures, see Glossary contained within the Half
Yearly Financial Report.
3 Further details are given in the Glossary contained within the Half Yearly
Financial Report.
Chairman’s Statement
Overview
The first six months of this year resulted in a strong performance for
European equities and we comfortably exceeded the performance of the FTSE
World Europe ex UK Index (the reference index) over this period, maintaining
the excellent performance of the Company.
In general, European equities have been strong performers in 2023, defying
concerns that the region might slip into recession. In fact, 2023 turned out
much better than most market participants had expected despite changes in
European Central Bank (ECB) monetary policy. Geopolitical events, although far
from resolved, also had a less significant impact than expected and European
gas and electricity prices fell back to late 2021 levels and are expected to
remain broadly stable. Consequently, growth was far better and inflation much
lower than generally anticipated.
Initial weakness in January, following strong markets during the fourth
quarter of 2023, was soon replaced by solid earnings reports from European
large cap stocks, as well as evidence of a strong underlying economy. The
robust corporate earnings, combined with positive outlook statements from
companies and support from reasonably resilient macroeconomic data, drove
markets higher in February.
Performance
Against this backdrop, I am pleased to report that over the six months ended
29 February 2024, the Company’s net asset value per share (NAV) returned
18.6%, outperforming the reference index which returned 9.6%. Over the same
period, the Company’s share price returned 20.5% (all percentages calculated
in Pounds Sterling terms with dividends reinvested).
Since the period end to 1 May 2024, the Company’s NAV has decreased by 3.4%
compared with a rise in the FTSE World Europe ex UK Index of 2.0% over the
same period.
Revenue earnings and dividends
The Company’s revenue return per share for the six-month period ended 29
February 2024 amounted to 0.06p compared with 0.02p for the corresponding
period in 2023. The majority of the Company’s income typically is generated
in the second half of the year when portfolio companies announce and pay
dividends. The Board has taken this into account in considering the interim
dividend payment level.
The Board has declared an interim dividend of 1.75p (2023: 1.75p) per share.
The dividend will be paid on 19 June 2024 to shareholders on the Company’s
register on 24 May 2024, the ex-dividend date being 23 May 2024.
Management of share rating
Investor sentiment and discounts have been influenced by various external
factors and uncertainties, including rising interest rates, and discounts have
widened generally across the investment trust sector. The average discount for
the AIC Europe sector was 9.2% over the six months ended 29 February 2024 and
the Company’s discount was not immune to market pressures and also widened,
with the shares trading at an average discount of 6.3% over the period under
review. The Board monitors the discount closely and, following consultation
with the Manager and Company’s corporate broker, Cavendish Securities, it
was determined that it was in shareholders’ interests to buy back shares
with the objective of ensuring that an excessive discount to NAV did not
arise.
As part of this program, the Company bought back 336,310 shares for a total
consideration of £1,914,000 over the six months under review. Since 29
February 2024 and up to the latest practicable date of 1 May 2024, a further
519,329 shares have been bought back for a total consideration of £3,298,000.
As at this date, the Company’s shares were trading at a discount of 3.6%, a
significantly narrower discount than all other companies in our sector
reflecting our strong investment performance.
All shares were bought back at a discount to the prevailing NAV and the buy
backs were therefore accretive to existing shareholders. All shares bought
back have been placed in treasury for future reissue.
Tender offers
The Directors of the Company have the discretion to make semi-annual tender
offers at the prevailing NAV less 2%, for up to 20% of the issued share
capital in May and November of each year. The Board announced on 20 September
2023 that it had decided not to proceed with a tender offer in November 2023
and on 21 March 2024 that the tender offer in May 2024 would also not be
implemented.
Despite a challenging period for discounts, it is pleasing that the
Company’s share rating has been relatively stable versus the market and peer
group and the Board believes that the buyback activity undertaken has been
beneficial in reducing the volatility of the Company’s share rating and in
shareholders’ interests. As the Company’s discount was trading at 5.3% on
20 March 2024 and was trading at the narrowest discount within its peer group,
the Board concluded that it was not in the interests of shareholders as a
whole to implement the May 2024 semi-annual tender offer.
The Board will continue to monitor the Company’s discount and may use the
Company’s share buyback powers to ensure that the share price does not go to
an excessive discount to the underlying NAV. The Board remains committed to
supporting the share price to a narrow discount or premium to its NAV.
Outlook
The outlook for Europe is mixed in 2024 but European equities surprised
positively last year and this could be repeated. Stock markets will continue
to be dominated by interest rates and European stocks have been boosted by
expectations of interest rate cuts but the ECB is likely to be cautious and
will presumably take its time in adjusting policy despite Eurozone inflation
falling at a brisk pace. There are additional risks, aside from the prospect
of recession: operating margins for European stocks hit record highs in 2023
which may not be replicated this year, continued weak growth in China and less
exposure to artificial intelligence, a key driver for US stocks.
However, our portfolio managers are cautiously optimistic as the ECB should be
able to start cutting interest rates later in the year as inflationary
pressures continue to ease. The surge in commodity prices driven by the war in
Ukraine and rise in goods prices driven by the supply-chain disruptions during
the COVID-19 pandemic are largely in the past. Additionally, the earnings
situation of most companies in Europe has significantly improved compared to
2022 and the region’s stocks remain lowly valued versus history and on an
international basis, suggesting there could still be scope for share price
gains in 2024.
Against this backdrop, our portfolio managers remain positive on the outlook
for European equities. The Board is also confident that they will continue to
remain selective and focus on issuer fundamentals in a concentrated, high
conviction portfolio.
ERIC SANDERSON
2 May 2024
Investment Manager’s Report
Market review
The Company’s share price and underlying net asset value per share (NAV)
rose by 20.5% and 18.6%, respectively, over the six months to 29 February
2024. By way of comparison, the FTSE World Europe ex UK Index returned 9.6%
during the same period. (All percentages calculated in Pounds Sterling terms
with dividends reinvested.)
European equities delivered very strong returns over the last six months
despite a backdrop of cautious sentiment given concerns over a potential
recession, weaker China macro data and geopolitical risks. The asset class
remains under-owned by investors and we observe a generally defensive
positioning.
Our optimism entering the period – reflected in a pro-cyclical portfolio
positioning – was rewarded as inflation fell closer to central bank targets
and wages began growing in real terms, while corporate earnings came through
better than the market had expected. Technology, industrials, financials and
consumer discretionary sectors led the strong market rally, while defensive
sectors including consumer staples and utilities underperformed.
Portfolio overview
The portfolio’s positioning in the technology sector, semiconductors in
particular, delivered the strongest contribution to returns over the period.
The industry sells into a range of different end markets and applications
including autos, phones, PCs, gaming as well as industrial applications like
5G, cloud infrastructure and Artificial Intelligence (AI).
Over the past six months, there has been increasing evidence of the positive
impact from AI on the semiconductor sector as material orders from large
technology companies started to come through. We seem to be entering a
semiconductor upcycle, which tends to have duration and can produce
significant opportunities for growth. The scale of capital expenditure (capex)
increases that many technology firms have committed to in order to build out
their AI infrastructure and capabilities has been impressive. This is not
solely a US phenomenon and we believe we own European stocks that will see
significant benefits from this investment spend.
BE Semiconductor was the top contributor to relative returns over the period.
The company is one of the leading providers of packaging solutions such as
hybrid bonding, which is set to become an increasingly important technology in
enabling semiconductor chips to continue getting smaller, yet more powerful
and more energy efficient. Other semiconductor businesses in the portfolio
including ASM International and ASML were also amongst the best performers.
A positive contribution also came from areas that we consider ‘capex
winners’. After a long period of under-investment from many corporates post
the global financial crisis, we believe we are at the beginning of significant
investment spend to come. Companies enabling the energy transition, the
electrification of our economies or that help re-shore supply chains can truly
benefit from these transformations. The portfolio’s position in Schneider
Electric (Schneider) was amongst the best performers, benefiting from these
trends. Around 75% of Schneider’s sales come from their energy management
division. Schneider plays a key role in emission reduction initiatives due to
their solutions that help make public and private buildings more energy
efficient. On the infrastructure side, Schneider holds a leading position in
medium voltage solutions that allow for making power grids smarter, more
energy efficient and capable to deal with renewable energy. That
infrastructure segment is expected to grow at a double-digit rate over the
next few years.
Within luxury, concerns around deteriorating demand trends and operating
deleverage were disproved by the most established brands selling to high-end
consumers. The portfolio’s position in Hermès contributed positively given
strong Q4 results and upbeat commentary around 2024 trading so far. Elsewhere
in the sector, luxury sportscar maker Ferrari also impressed with strong
results as the brand continues to see strong demand worldwide across models.
The order book is full, giving investors earnings visibility out to 2026
whilst revenue from personalisation options is hitting record highs.
Finally, Novo Nordisk (Novo), a global leader in the treatment of diabetes and
obesity, continued to perform well. Demand for Novo’s obesity drug Wegovy,
which was launched two years ago, has been a key driver in moving the share
price almost 30% higher over the last six months. We believe the obesity
market opportunity is significant. Currently, only a very small percentage of
an estimated 800 million people who live with obesity globally receive
long-term medical treatment given the severe side effects of older therapies.
Wegovy, however, has shown a strong efficacy in weight loss, with a manageable
side effect profile alongside a significant reduction in major adverse
cardiovascular events. These results will not only help to underpin the
validity of this new category of drugs, but they also underwrite future growth
of the group at high returns for a long time to come.
Outside of Novo Nordisk, the portfolio’s health care investments were less
successful over the period. Regardless of the attractive long-term
fundamentals, the life sciences industry experienced continued weakness
related to inventory destocking. The interest rate environment also weighed on
this part of the market as tighter financial conditions meant less funding for
early stage and experimental projects. In this context, shares in Lonza and
Sartorius Stedim were amongst the largest detractors from relative returns and
we reduced the former and exited the latter given our lower conviction.
Shares in logistics company DSV were the single largest detractor. The main
weakness came from the company’s announcement to enter a US$10 billion
exclusive logistics joint venture with Saudi’s NEOM city project which led
to concerns over the capital intensity of the project, as well as a shift in
business strategy. Having discussed these issues with DSV’s management, we
are somewhat reassured that the deal is financially solid and DSV have
protection mechanisms in place should the project disappoint. We continue to
closely monitor the position and run slightly lower weights than we have in
the past.
Other changes to the portfolio were limited. We added Linde, a leader in
industrial gases with strong pricing power, geared into structural growth in
energy transition and capex spend and with diversified end-markets and low
financial leverage. Royal Unibrew was sold after a prolonged period of weaker
volumes and a disappointing performance from one of its recently acquired
brands.
Outlook
Looking to the future we remain cautiously optimistic as inflation is trending
down and the economy appears resilient, even with interest rates at current
levels. Financial conditions have already started to ease and mortgage rates
in many European countries are already falling. Leverage in the corporate
sector is low, margins are strong and the end of the destocking cycle is in
sight with a positive inflection to come.
STEFAN GRIES AND ALEXANDRA DANGOOR
BLACKROCK INVESTMENT MANAGEMENT (UK) LIMITED
2 May 2024
Ten largest investments
Together, the Company’s ten largest investments represented 52.2% of the
Company’s portfolio as at 29 February 2024 (31 August 2023: 53.4%)
1 Novo Nordisk (2023: 1st)
Health Care company
Market value: £62,558,000
Share of investments: 8.8%
Novo Nordisk is a Danish multinational pharmaceutical company and a leader in
diabetes care. Novo Nordisk is expected to post strong earnings and cash flow
growth driven by demand for Ozempic which treats Type 2 diabetes and its
weight management drug Wegovy. The latter has recently provided evidence of
reducing major adverse cardiovascular events by 20%.
2 ASML (2023: 3rd)
Technology company
Market value: £52,062,000
Share of investments: 7.3%
ASML is a Dutch company specialising in photolithography systems for the
semiconductor industry. The company is at the forefront of technological
change, investing in leading research and development to capture the
structural growth opportunity coming from growth in mobile devices and
microchip components. High barriers to entry within the industry give ASML a
protected position with strong pricing power allowing growth in margins.
3 LVMH (2023: 2nd)
Consumer Discretionary company
Market value: £44,228,000
Share of investments: 6.2%
LVMH is a French multinational corporation specialising in luxury goods. The
group has a strong and well-diversified portfolio of luxury brands ranging
from handbags to spirits to cosmetics. LVMH’s business model enjoys high
barriers to entry due to the heritage, provenance and exquisite quality of its
product offering. Its consistent brand investment through economic cycles has
helped to spur brand desirability and allowed for significant pricing power.
4 RELX (2023: 4th)
Consumer Discretionary company
Market value: £43,697,000
Share of investments: 6.2%
RELX is a multinational information and analytics company with high barriers
to entry in most of its divisions, including scientific publishing. Their
capital light business model enables a high rate of cash conversion with
repeat subscription-based revenues. The business benefits from increasing
usage of data globally supporting their data analytics business.
5 BE Semiconductor (2023: 9th)
Technology company
Market value: £34,977,000
Share of investments: 4.9%
BE Semiconductor is a Dutch supplier of semiconductor assembly equipment. The
company can continue to grow its market share of an overall growing market
given its best-in-class position to capture the advanced packaging segment of
the assembly market. The chip makers will have to rely on more innovative
packaging solutions (e.g. hybrid bonding) to continue to improve chip
efficiency (faster processing, lower power consumption) while also keeping
control over manufacturing costs.
6 Hermès (2023: 7th)
Consumer Discretionary company
Market value: £30,492,000
Share of investments: 4.3%
Hermès is a French luxury design house specialising in leather goods,
lifestyle accessories, home furnishings, perfumery, jewellery, watches and
high-end clothing. With good brand management and craftsmanship, Hermès
products are supply constrained and the company enjoys strong earnings
visibility as some of its most iconic products are sold on allocation via
waiting lists. Hermès has been run in a conservative fashion for generations
with strategic decisions taken with the longest of timeframes.
7 Ferrari (2023: 11th)
Consumer Discretionary company
Market value: £27,199,000
Share of investments: 3.8%
Ferrari is an Italian luxury sports car manufacturer emphasising exclusivity,
performance and quality globally, with a strong focus on innovation and
delivering unique driving experiences to its clientele. There is a lot of
excitement for 2024 as limited release models are being introduced including
the SF90 XX Stradale, followed by the Spider in the second quarter of 2024.
Both cars are expected to come at higher price points that will be additive to
Ferrari’s overall revenue mix. Demand will remain strong beyond 2024, with
the company’s order book already sold out up to 2026.
8 Safran (2023: 10th)
Industrials company
Market value: £26,997,000
Share of investments: 3.8%
Safran is a French multinational supplier of aerospace, defence and security
systems. The industry has emerged from a heavy investment period and Safran is
well-placed to benefit from continued strength in its best in class
after-market business and strong execution in its LEAP engine program which
should drive growth for the next decade.
9 ASM International (2023: 13th)
Technology company
Market value: £24,935,000
Share of investments: 3.5%
ASM International is a Dutch international company that designs and
manufactures equipment and process solutions to produce semiconductor devices
for wafer processing. The company aims to create sustainable, long-term value
for their stakeholders and a degree of recovery in logic/foundry. The company
is also set to benefit from the increasing importance of power emerging
technologies such as Artificial Intelligence (AI), where we’ve seen a step
change with the roll out of generative AI tools in 2023.
10 Partners Group (2023: 19th)
Financials company
Market value: £24,126,000
Share of investments: 3.4%
Partners Group is a Swiss-based global private markets firm. Partners Group
specialise in private equity, although also offer private debt, private real
estate and private infrastructure to clients. Their aim is to provide clients
with solutions, providing them with a diverse portfolio of alternatives which
suit their needs. With the funding environment easing, Partners Group is well
set up to raise assets under management (AUM) in the alternatives space. On
top of this, the dividend yield is 4% and the company has an impressive
historic dividend payout policy. In the second half of 2023 the company
started seeing an uptrend towards more normalised conversion periods, with
demand expected to be carried over into the next few years.
All percentages reflect the value of the holding as a percentage of total
investments.
Arrows indicate the change in relative ranking of the position in the
portfolio compared to its ranking as at 31 August 2023.
Portfolio analysis as at 29 February 2024
% % % % % % % % % % % % % FTSE
France Switzerland Ireland Germany Sweden Netherlands Denmark Belgium Spain Italy Central Portfolio Portfolio World
Eastern 29.02.24 31.08.23 Europe
Europe & ex UK
Other 29.02.24
Basic Materials – – – – – 2.5 – – – – 2.4 4.9 2.6 4.4
Consumer Discretionary 13.4 – – – – – – – – 3.8 6.2 23.4 20.7 13.8
Consumer Staples – 1.2 – – – – – – – – – 1.2 4.4 7.6
Energy – – – – – – – – – – – – – 3.9
Financials – 3.4 2.8 – – – – 1.8 – – 0.6 8.6 8.1 18.1
Health Care – 4.2 – – – – 10.9 – – – – 15.1 18.0 15.7
Industrials 7.1 4.9 2.4 1.7 3.5 2.1 2.0 – – – – 23.7 22.7 18.4
Real Estate – – – – – – – – – – – – – 1.0
Technology 1.7 3.3 – – 2.4 15.7 – – – – – 23.1 23.5 10.5
Telecommunications – – – – – – – – – – – – – 2.9
Utilities – – – – – – – – – – – – – 3.7
% Portfolio 29.02.24 22.2 17.0 5.2 1.7 5.9 20.3 12.9 1.8 – 3.8 9.2 100.0 – –
% Portfolio 31.08.23 18.8 19.9 5.4 1.3 4.6 17.3 17.9 1.9 2.4 4.2 6.3 – 100.0 –
FTSE World Europe ex UK 29.02.24 22.1 18.4 0.5 16.6 6.5 10.9 6.6 1.6 4.8 4.8 7.2 – – 100.0
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Percentages in the table above are a % of total investments.
Investments as at 29 February 2024
Country Market % of
of operation value investments
£’000
Industrials
Safran France 26,997 3.8
Schneider Electric France 23,550 3.3
Sika Switzerland 20,420 2.9
Kingspan Ireland 17,041 2.4
Atlas Copco Sweden 16,801 2.4
Adyen Netherlands 14,897 2.1
DSV Panalpina Denmark 14,324 2.0
Rational Germany 12,303 1.7
Epiroc Sweden 7,844 1.1
Belimo Switzerland 7,373 1.0
VAT Group Switzerland 7,296 1.0
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168,846 23.7
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Consumer Discretionary
LVMH France 44,228 6.2
RELX United Kingdom 43,697 6.2
Hermès France 30,492 4.3
Ferrari Italy 27,199 3.8
L'Oreal France 20,844 2.9
Fix Price Group* Russia 1 –
--------------- ---------------
166,461 23.4
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Technology
ASML Netherlands 52,062 7.3
BE Semiconductor Netherlands 34,977 4.9
ASM International Netherlands 24,935 3.5
STMicroelectronics Switzerland 23,313 3.3
Hexagon Sweden 17,265 2.4
ALTEN Group France 12,097 1.7
--------------- ---------------
164,649 23.1
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Health Care
Novo Nordisk Denmark 62,558 8.8
Lonza Group Switzerland 19,532 2.7
ChemoMetec Denmark 14,868 2.1
Straumann Switzerland 10,896 1.5
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107,854 15.1
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Financials
Partners Group Switzerland 24,126 3.4
Allied Irish Banks (AIB) Ireland 20,189 2.8
KBC Groep Belgium 12,353 1.8
Allfunds Group United Kingdom 4,504 0.6
Sberbank* Russia – –
--------------- ---------------
61,172 8.6
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Basic Materials
IMCD Netherlands 17,426 2.5
Linde United States 17,033 2.4
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34,459 4.9
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Consumer Staples
Lindt Switzerland 8,529 1.2
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8,529 1.2
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Energy
Lukoil* Russia – –
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Total investments 711,970 100.0
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* During the year ended 31 August 2022, the investments in Fix Price Group,
Sberbank and Lukoil were marked down to a nominal value of £0.01 as the
secondary listings of depositary receipts of Russian companies were suspended
from trading.
All investments are in ordinary shares unless otherwise stated. The total
number of investments held at 29 February 2024 was 36 (31 August 2023: 39).
Industry classifications in the table above are based on the Industrial
Classification Benchmark standard for categorisation of companies by industry
and sector.
As at 29 February 2024, the Company did not hold any equity interests
comprising more than 3% of any company’s share capital.
Interim Management Report and Responsibility Statement
The Chairman’s Statement and the Investment Manager’s Report above give
details of the important events which have occurred during the period and
their impact on the financial statements.
Principal risks and uncertainties
The principal risks faced by the Company can be divided into various areas as
follows:
· Counterparty;
· Investment performance;
· Legal & regulatory compliance;
· Market;
· Operational;
· Financial; and
· Marketing.
The Board reported on the principal risks and uncertainties faced by the
Company in the Annual Report and Financial Statements for the year ended 31
August 2023. A detailed explanation can be found in the Strategic Report on
pages 33 to 37 and in note 16 on pages 98 to 104 of the Annual Report and
Financial Statements which are available on the website maintained by
BlackRock at www.blackrock.com/uk/brge.
In the view of the Board, there have not been any changes to the fundamental
nature of the principal risks and uncertainties since the previous report and
these are equally applicable to the remaining six months of the financial year
as they were to the six months under review.
Going concern
The Directors, having considered the nature and liquidity of the portfolio,
the Company’s investment objective and the Company’s projected income and
expenditure, are satisfied that the Company has adequate resources to continue
in operational existence for the foreseeable future and is financially sound.
The Board is mindful of the continuing uncertainty surrounding the current
environment of heightened geopolitical risk given the war in Ukraine and
conflict in the Middle East. The Board believes that the Company and its key
third-party service providers have in place appropriate business continuity
plans and these services have continued to be supplied without interruption.
The Company has a portfolio of investments which are predominantly readily
realisable and is able to meet all of its liabilities from its assets and
income generated from these assets. Accounting revenue and expense forecasts
are maintained and reported to the Board regularly and it is expected that the
Company will be able to meet all its obligations. The Investment Manager
generally aims to be fully invested and it is anticipated that gearing will
not exceed 15% of net asset value (NAV) at the time of drawdown of the
relevant borrowings. Borrowings under the overdraft facility shall at no time
exceed £75 million or 15% of the Company’s net asset value (whichever is
lower) and this covenant was complied with during the period. At 29 February
2024, the Company had net gearing of 7.4% (28 February 2023: 4.6%; 31 August
2023: 5.1%). Based on the above, the Board is satisfied that it is appropriate
to continue to adopt the going concern basis in preparing the financial
statements. Ongoing charges for the year ended 31 August 2023 were
approximately 0.98% of net assets.
Related party disclosure and transactions with the Manager
BlackRock Fund Managers Limited (BFM) was appointed as the Company’s
Alternative Investment Fund Manager (AIFM) with effect from 2 July 2014. BFM
has (with the Company’s consent) delegated certain portfolio and risk
management services, and other ancillary services, to BlackRock Investment
Management (UK) Limited (BIM (UK)). Both BFM and BIM (UK) are regarded as
related parties under the Listing Rules. Details of the fees payable are set
out in note 4 and note 13 below. The related party transactions with the
Directors are set out in note 12 below.
Directors’ responsibility statement
The Disclosure Guidance and Transparency Rules of the UK Listing Authority
require the Directors to confirm their responsibilities in relation to the
preparation and publication of the Interim Management Report and Financial
Statements.
The Directors confirm to the best of their knowledge that:
· the condensed set of financial statements contained within the Half Yearly
Financial Report has been prepared in accordance with applicable UK Accounting
Standards and the Accounting Standards Board’s Statement ‘Half Yearly
Financial Reports’; and
· the Interim Management Report, together with the Chairman’s Statement
and Investment Manager’s Report, include a fair review of the information
required by 4.2.7R and 4.2.8R of the FCA’s Disclosure Guidance and
Transparency Rules.
This Half Yearly Financial Report has not been audited or reviewed by the
Company’s auditors.
The Half Yearly Financial Report was approved by the Board on 2 May 2024 and
the above responsibility statement was signed on its behalf by the Chairman.
ERIC SANDERSON
FOR AND ON BEHALF OF THE BOARD
2 May 2024
Income Statement for the six months ended 29 February 2024
Six months ended Six months ended Year ended
29 February 2024 28 February 2023 31 August 2023 (audited)
(unaudited) (unaudited)
Notes Revenue Capital Total Revenue Capital Total Revenue Capital Total
£’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000
Gains on investments held at fair value through profit or loss – 106,000 106,000 – 80,774 80,774 – 87,830 87,830
Gains on foreign exchange – 423 423 – 106 106 – 1,149 1,149
Income from investments held at fair value through profit or loss 3 1,252 – 1,252 930 – 930 10,699 – 10,699
--------------- --------------- --------------- --------------- --------------- --------------- --------------- --------------- ---------------
Total income 1,252 106,423 107,675 930 80,880 81,810 10,699 88,979 99,678
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Expenses
Investment management fee 4 (470) (1,879) (2,349) (419) (1,675) (2,094) (888) (3,554) (4,442)
Other operating expenses 5 (406) (8) (414) (424) (61) (485) (1,934) (89) (2,023)
--------------- --------------- --------------- --------------- --------------- --------------- --------------- --------------- ---------------
Total operating expenses (876) (1,887) (2,763) (843) (1,736) (2,579) (2,822) (3,643) (6,465)
========= ========= ========= ========= ========= ========= ========= ========= =========
Net profit on ordinary activities before finance costs and taxation 376 104,536 104,912 87 79,144 79,231 7,877 85,336 93,213
Finance costs (184) (736) (920) (14) (57) (71) (167) (665) (832)
--------------- --------------- --------------- --------------- --------------- --------------- --------------- --------------- ---------------
Net profit on ordinary activities before taxation 192 103,800 103,992 73 79,087 79,160 7,710 84,671 92,381
Taxation charge (129) – (129) (51) – (51) (790) – (790)
--------------- --------------- --------------- --------------- --------------- --------------- --------------- --------------- ---------------
Net profit on ordinary activities after taxation 7 63 103,800 103,863 22 79,087 79,109 6,920 84,671 91,591
========= ========= ========= ========= ========= ========= ========= ========= =========
Earnings per ordinary share (pence) 7 0.06 102.96 103.02 0.02 78.20 78.22 6.85 83.77 90.62
========= ========= ========= ========= ========= ========= ========= ========= =========
The total columns of this statement represent the Company’s profit and loss
account. The supplementary revenue and capital accounts are both prepared
under guidance published by the Association of Investment Companies (AIC). All
items in the above statement derive from continuing operations. No operations
were acquired or discontinued during the period. All income is attributable to
the equity holders of the Company.
The net profit on ordinary activities for the period disclosed above
represents the Company’s total comprehensive income.
Statement of Changes in Equity for the six months ended 29 February 2024
Note Called Share Capital Special Capital Revenue Total
up share premium redemption reserve reserves reserve £’000
capital account reserve £’000 £’000 £’000
£’000 £’000 £’000
For the six months ended 29 February 2024 (unaudited)
At 31 August 2023 117 85,325 130 68,558 400,631 10,949 565,710
Total comprehensive income:
Net profit for the period – – – – 103,800 63 103,863
Transactions with owners, recorded directly to equity:
Ordinary shares repurchased into treasury – – – (1,904) – – (1,904)
Share buyback costs – – – (10) – – (10)
Dividends paid 1 6 – – – – – (5,040) (5,040)
--------------- --------------- --------------- --------------- --------------- --------------- ---------------
At 29 February 2024 117 85,325 130 66,644 504,431 5,972 662,619
========= ========= ========= ========= ========= ========= =========
For the six months ended 28 February 2023 (unaudited)
At 31 August 2022 117 85,325 130 71,572 315,960 10,695 483,799
Total comprehensive income:
Net profit for the period – – – – 79,087 22 79,109
Transactions with owners, recorded directly to equity:
Ordinary shares repurchased into treasury – – – (3,001) – – (3,001)
Share buyback costs – – – (13) – – (13)
Dividends paid 2 6 – – – – – (4,899) (4,899)
--------------- --------------- --------------- --------------- --------------- --------------- ---------------
At 28 February 2023 117 85,325 130 68,558 395,047 5,818 554,995
========= ========= ========= ========= ========= ========= =========
For the year ended 31 August 2023 (audited)
At 31 August 2022 117 85,325 130 71,572 315,960 10,695 483,799
Total comprehensive income:
Net profit for the year – – – – 84,671 6,920 91,591
Transactions with owners, recorded directly to equity:
Ordinary shares repurchased into treasury – – – (3,001) – – (3,001)
Share buyback costs – – – (13) – – (13)
Dividends paid 3 6 – – – – – (6,666) (6,666)
--------------- --------------- --------------- --------------- --------------- --------------- ---------------
At 31 August 2023 117 85,325 130 68,558 400,631 10,949 565,710
========= ========= ========= ========= ========= ========= =========
1 Final dividend paid in respect of the year ended 31 August 2023 of 5.00p
per share was declared on 8 November 2023 and paid on 20 December 2023.
2 Final dividend paid in respect of the year ended 31 August 2022 of 4.85p
per share was declared on 3 November 2022 and paid on 16 December 2022.
3 Interim dividend paid in respect of the year ended 31 August 2023 of 1.75p
per share was declared on 10 May 2023 and paid on 19 June 2023. Final dividend
paid in respect of the year ended 31 August 2022 of 4.85p per share was
declared on 3 November 2022 and paid on 16 December 2022.
For information on the Company’s distributable reserves, please refer to
note 10 below.
Balance Sheet as at 29 February 2024
Notes 29 February 28 February 31 August
2024 2023 2023
(unaudited) (unaudited) (audited)
£’000 £’000 £’000
Fixed assets
Investments held at fair value through profit or loss 11 711,970 580,767 594,727
Current assets
Current tax asset 2,446 1,673 2,350
Debtors 7,017 26 1,517
--------------- --------------- ---------------
Total current assets 9,463 1,699 3,867
========= ========= =========
Creditors – amounts falling due within one year
Bank overdraft (55,509) (23,869) (27,617)
Other creditors (3,305) (3,602) (5,267)
--------------- --------------- ---------------
Total current liabilities (58,814) (27,471) (32,884)
--------------- --------------- ---------------
Net current liabilities (49,351) (25,772) (29,017)
--------------- --------------- ---------------
Net assets 662,619 554,995 565,710
========= ========= =========
Capital and reserves
Called up share capital 9 117 117 117
Share premium account 85,325 85,325 85,325
Capital redemption reserve 130 130 130
Special reserve 66,644 68,558 68,558
Capital reserves 504,431 395,047 400,631
Revenue reserve 5,972 5,818 10,949
--------------- --------------- ---------------
Total shareholders’ funds 662,619 554,995 565,710
========= ========= =========
Net asset value per ordinary share (pence) 7 658.25 549.50 560.11
========= ========= =========
Statement of Cash Flows for the six months ended 29 February 2024
Six months Six months Year
ended ended ended
29 February 28 February 31 August
2024 2023 2023
(unaudited) (unaudited) (audited)
£’000 £’000 £’000
Operating activities
Net profit on ordinary activities before taxation 103,992 79,160 92,381
Add back finance costs 920 71 832
Gains on investments held at fair value through profit or loss (106,000) (80,774) (87,830)
Gains on foreign exchange (423) (106) (1,149)
Sale of investments held at fair value through profit or loss 85,303 39,221 86,863
Purchase of investments held at fair value through profit or loss (103,559) (61,398) (115,924)
Decrease/(increase) in debtors 125 194 (25)
(Decrease)/increase in other creditors (967) 858 1,231
Taxation on investment income (608) (260) (1,754)
Interest paid (920) (71) (832)
Refund of withholding tax reclaims 479 455 533
--------------- --------------- ---------------
Net cash used in operating activities (21,658) (22,650) (25,674)
========= ========= =========
Financing activities
Ordinary shares repurchased into treasury (1,617) (3,592) (3,592)
Dividends paid (5,040) (4,899) (6,666)
--------------- --------------- ---------------
Net cash used in financing activities (6,657) (8,491) (10,258)
========= ========= =========
Decrease in cash and cash equivalents (28,315) (31,141) (35,932)
Cash and cash equivalents at the start of the period/year (27,617) 7,166 7,166
Effect of foreign exchange rate changes 423 106 1,149
--------------- --------------- ---------------
Cash and cash equivalents at the end of the period/year (55,509) (23,869) (27,617)
========= ========= =========
Comprised of:
Bank overdraft (55,509) (23,869) (27,617)
--------------- --------------- ---------------
(55,509) (23,869) (27,617)
========= ========= =========
Notes to the Financial Statements for the six months ended 29 February 2024
1. Principal activity
The principal activity of the Company is that of an investment trust company
within the meaning of Section 1158 of the Corporation Tax Act 2010.
2. Basis of preparation
The financial statements of the Company are prepared on a going concern basis
in accordance with Financial Reporting Standard 104 Interim Financial
Reporting (FRS 104) applicable in the United Kingdom and Republic of Ireland
and the revised Statement of Recommended Practice – ‘Financial Statements
of Investment Trust Companies and Venture Capital Trusts’ (SORP) issued by
the Association of Investment Companies (AIC) in October 2019, and updated in
July 2022, and the provisions of the Companies Act 2006.
The accounting policies and estimation techniques applied for the condensed
set of financial statements are as set out in the Company’s Annual Report
and Financial Statements for the year ended 31 August 2023.
3. Income
Six months Six months Year
ended ended ended
29 February 28 February 31 August
2024 2023 2023
(unaudited) (unaudited) (audited)
£’000 £’000 £’000
Investment income:
UK dividends – – 764
Overseas dividends 1,252 929 9,907
Overseas special dividends – – 27
--------------- --------------- ---------------
Total investment income 1,252 929 10,698
========= ========= =========
Other income:
Interest received – 1 1
--------------- --------------- ---------------
Total income 1,252 930 10,699
========= ========= =========
Dividends and interest received in cash during the period amounted to
£758,000 and £nil respectively (six months ended 28 February 2023: £691,000
and £1,000; year ended 31 August 2023: £7,781,000 and £1,000).
No special dividends have been recognised in capital during the period (six
months ended 28 February 2023: £nil; year ended 31 August 2023: £nil).
4. Investment management fee
Six months ended Six months ended Year ended
29 February 2024 28 February 2023 31 August 2023
(unaudited) (unaudited) (audited)
Revenue Capital Total Revenue Capital Total Revenue Capital Total
£’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000
Investment management fee 470 1,879 2,349 419 1,675 2,094 888 3,554 4,442
--------------- --------------- --------------- --------------- --------------- --------------- --------------- --------------- ---------------
Total 470 1,879 2,349 419 1,675 2,094 888 3,554 4,442
========= ========= ========= ========= ========= ========= ========= ========= =========
With effect from 1 January 2023, the investment management fee is levied
quarterly based on a tiered basis: 0.85% per annum of the month-end net asset
value up to £350 million and 0.75% per annum of the month-end net asset value
above £350 million.
Up to and including 31 December 2022, the investment management fee was levied
quarterly, based on 0.85% per annum of the net asset value on the last day of
each month.
The investment management fee is allocated 20% to the revenue account and 80%
to the capital account of the Income Statement. There is no additional fee for
company secretarial and administration services.
5. Other operating expenses
Six months Six months Year
ended ended ended
29 February 28 February 31 August
2024 2023 2023
(unaudited) (unaudited) (audited)
£’000 £’000 £’000
Allocated to revenue:
Broker fees 24 24 48
Custody fees 27 14 36
Depositary fees 32 32 65
Audit fees 1 26 29 57
Legal fees 13 13 26
Registrar’s fees 45 48 97
Directors’ emoluments 89 84 173
Marketing fees 77 46 97
Postage and printing fees 22 35 68
AIC fees 11 11 21
Professional fees 11 43 66
Stock exchange listing fees 12 24 35
Write back of prior year expense accruals 2 (12) – (23)
Other administration costs 29 21 24
Provision for doubtful debts 3 – – 1,144
--------------- --------------- ---------------
406 424 1,934
========= ========= =========
Allocated to capital:
Custody transaction costs 4 8 61 89
--------------- --------------- ---------------
414 485 2,023
========= ========= =========
1 No non-audit services are provided by the Company’s auditors.
2 Relates to postage and printing fees and other administration costs written
back in the period (six months ended 28 February 2023: no prior year accruals
written back; year ended 31 August 2023: legal fees and registrar’s fees).
3 Provision for doubtful debts relate to dividend income from Sberbank which
has not been received due to measures imposed by the Russian authorities in
response to the sanctions that have been imposed on Russia as a result of the
invasion of Ukraine.
4 For the six month period ended 29 February 2024, expenses of £8,000 (six
months ended 28 February 2023: £61,000; year ended 31 August 2023: £89,000)
were charged to the capital account of the Income Statement. These relate to
transaction costs charged by the custodian on sale and purchase trades.
The direct transaction costs incurred on the acquisition of investments
amounted to £191,000 for the six months ended 29 February 2024 (six months
ended 28 February 2023: £98,000; year ended 31 August 2023: £342,000). Costs
relating to the disposal of investments amounted to £52,000 for the six
months ended 29 February 2024 (six months ended 28 February 2023: £28,000;
year ended 31 August 2023: £74,000). All transaction costs have been included
within the capital account.
6. Dividends
The Directors have declared an interim dividend of 1.75p per share for the
period ended 29 February 2024, payable on 19 June 2024 to shareholders on the
register on 24 May 2024. The total cost of the dividend based on 100,144,522
ordinary shares in issue at 1 May 2024 was £1,752,529 (28 February 2023:
£1,768,000).
In accordance with FRS 102, Section 32 Events After the End of the Reporting
Period, the interim dividend payable on the ordinary shares has not been
included as a liability in the financial statements, as interim dividends are
only recognised when they have been paid.
7. Earnings and net asset value per ordinary share
Revenue, capital earnings and net asset value per ordinary share are shown
below and have been calculated using the following:
Six months Six months Year
ended ended ended
29 February 28 February 31 August
2024 2023 2023
(unaudited) (unaudited) (audited)
Net revenue profit attributable to ordinary shareholders (£’000) 63 22 6,920
Net capital profit attributable to ordinary shareholders (£’000) 103,800 79,087 84,671
--------------- --------------- ---------------
Total profit attributable to ordinary shareholders (£’000) 103,863 79,109 91,591
========= ========= =========
Total shareholders’ funds (£’000) 662,619 554,995 565,710
========= ========= =========
Earnings per share
The weighted average number of ordinary shares in issue during the period on which the earnings per ordinary share was calculated was: 100,816,318 101,136,375 101,067,709
The actual number of ordinary shares in issue at the end of the period on which the net asset value per ordinary share was calculated was: 100,663,851 101,000,161 101,000,161
Calculated on weighted average number of ordinary shares:
Revenue earnings per share (pence) – basic and diluted 0.06 0.02 6.85
Capital earnings per share (pence) – basic and diluted 102.96 78.20 83.77
--------------- --------------- ---------------
Total earnings per share (pence) – basic and diluted 103.02 78.22 90.62
========= ========= =========
As at As at As at
29 February 28 February 31 August
2024 2023 2023
(unaudited) (unaudited) (audited)
Net asset value per share (pence) 658.25 549.50 560.11
Ordinary share price (pence) 629.00 523.00 527.00
========= ========= =========
There were no dilutive securities at 29 February 2024 (28 February 2023: none;
31 August 2023: none).
8. Reconciliation of liabilities arising from financing activities
Six months Six months Year
ended ended ended
29 February 28 February 31 August
2024 2023 2023
(unaudited) (unaudited) (audited)
£’000 £’000 £’000
Bank overdraft at beginning of the period/year 27,617 182 182
Cash flows:
Movement in overdraft 28,256 23,885 27,934
Non cash flows:
Effects of foreign exchange gain (364) (198) (499)
--------------- --------------- ---------------
Bank overdraft at end of the period/year 55,509 23,869 27,617
========= ========= =========
9. Called up share capital
(unaudited) Ordinary Treasury Total Nominal
shares shares shares value
number number number £’000
Allotted, called up and fully paid share capital comprised:
Ordinary shares of 0.1 pence each:
At 31 August 2023 101,000,161 16,928,777 117,928,938 117
Ordinary shares repurchased into treasury (336,310) 336,310 – –
--------------- --------------- --------------- ---------------
At 29 February 2024 100,663,851 17,265,087 117,928,938 117
========= ========= ========= =========
During the six months ended 29 February 2024, 336,310 ordinary shares were
repurchased and held in treasury (six months ended 28 February 2023: 698,692;
year ended 31 August 2023: 698,692) for a net consideration after expenses of
£1,914,000 (six months ended 28 February 2023: £3,014,000; year ended 31
August 2023: £3,014,000).
Since 29 February 2024 and up to the latest practicable date of 1 May 2024,
519,329 ordinary shares have been repurchased and placed in treasury for a
total consideration of £3,298,000.
10. Reserves
The share premium account and capital redemption reserve are not distributable
reserves under the Companies Act 2006. In accordance with ICAEW Technical
Release 02/17BL on Guidance on Realised and Distributable Profits under the
Companies Act 2006, the special reserve and capital reserves may be used as
distributable reserves for all purposes and, in particular, the repurchase by
the Company of its ordinary shares and for payments such as dividends. In
accordance with the Company’s Articles of Association, the special reserve,
capital reserves and the revenue reserve may be distributed by way of
dividend. The gain on the capital reserve arising on the revaluation of
investments held of £247,433,000 (28 February 2023: gain of £132,037,000; 31
August 2023: gain of £149,450,000) is subject to fair value movements and may
not be readily realisable at short notice; as such it may not be entirely
distributable. The investments are subject to financial risks; as such capital
reserves (arising on investments sold) and the revenue reserve may not be
entirely distributable if a loss occurred during the realisation of these
investments.
11. Financial risks and valuation of financial instruments
The Company’s investment activities expose it to the various types of risk
which are associated with the financial instruments and markets in which it
invests. The risks are substantially consistent with those disclosed in the
previous annual financial statements, with the exception of those outlined
below.
Market risk arising from price risk
Price risk is the risk that the fair value or future cash flows of a financial
instrument will fluctuate because of changes in market prices (other than
those arising from interest rate risk or currency risk), whether those changes
are caused by factors specific to the individual financial instrument or its
issuer, or factors affecting similar financial instruments traded in the
market. Local, regional or global events such as war, acts of terrorism, the
spread of infectious illness or other public health issues, recessions,
climate change or other events could have a significant impact on the Company
and the market price of its investments and could result in increased premiums
or discounts to the Company’s net asset value.
Valuation of financial instruments
Financial assets and financial liabilities are either carried in the Balance
Sheet at their fair value (investments) or at an amount which is a reasonable
approximation of fair value (due from brokers, dividends and interest
receivable, due to brokers, accruals, cash and cash equivalents and
overdrafts). Section 34 of FRS 102 requires the Company to classify fair value
measurements using a fair value hierarchy that reflects the significance of
inputs used in making the measurements. The valuation techniques used by the
Company are explained in the accounting policies note on page 88 of the Annual
Report and Financial Statements for the year ended 31 August 2023.
Categorisation within the hierarchy has been determined on the basis of the
lowest level input that is significant to the fair value measurement of the
relevant asset.
The fair value hierarchy has the following levels:
Level 1 – Quoted market price for identical instruments in active markets
A financial instrument is regarded as quoted in an active market if quoted
prices are readily available from an exchange, dealer, broker, industry group,
pricing service or regulatory agency and those prices represent actual and
regularly occurring market transactions on an arm’s length basis. The
Company does not adjust the quoted price for these instruments.
Level 2 – Valuation techniques using observable inputs
This category includes instruments valued using quoted prices for similar
instruments in markets that are considered less than active; or other
valuation techniques where all significant inputs are directly or indirectly
observable from market data.
Level 3 – Valuation techniques using significant unobservable inputs
This category includes all instruments where the valuation technique includes
inputs not based on market data and these inputs could have a significant
impact on the instrument’s valuation.
This category also includes instruments that are valued based on quoted prices
for similar instruments where significant entity determined adjustments or
assumptions are required to reflect differences between the instruments and
instruments for which there is no active market. The Investment Manager
considers observable data to be that market data that is readily available,
regularly distributed or updated, reliable and verifiable, not proprietary and
provided by independent sources that are actively involved in the relevant
market.
The level in the fair value hierarchy within which the fair value measurement
is categorised in its entirety is determined on the basis of the lowest level
input that is significant to the fair value measurement. If a fair value
measurement uses observable inputs that require significant adjustment based
on unobservable inputs, that measurement is a Level 3 measurement.
Assessing the significance of a particular input to the fair value measurement
in its entirety requires judgement, considering factors specific to the asset
or liability, including an assessment of the relevant risks including but not
limited to credit risk, market risk, liquidity risk, business risk and
sustainability risk. The determination of what constitutes ‘observable’
inputs requires significant judgement by the Investment Manager and these
risks are adequately captured in the assumptions and inputs used in
measurement of Level 3 assets or liabilities.
Fair values of financial assets and financial liabilities
The table below is the analysis of the Company’s financial instruments
measured at fair value at the balance sheet date.
Financial assets at fair value through profit or loss at 29 February 2024 Level 1 Level 2 Level 3 Total
(unaudited) £’000 £’000 £’000 £’000
Equity investments 711,969 – 1 711,970
--------------- --------------- --------------- ---------------
Total 711,969 – 1 711,970
========= ========= ========= =========
Financial assets at fair value through profit or loss at 28 February 2023 Level 1 Level 2 Level 3 Total
(unaudited) £’000 £’000 £’000 £’000
Equity investments 580,764 – 3 580,767
--------------- --------------- --------------- ---------------
Total 580,764 – 3 580,767
========= ========= ========= =========
Financial assets at fair value through profit or loss at 31 August 2023 Level 1 Level 2 Level 3 Total
(audited) £’000 £’000 £’000 £’000
Equity investments 593,785 – 942 594,727
--------------- --------------- --------------- ---------------
Total 593,785 – 942 594,727
========= ========= ========= =========
The Company held three Level 3 securities as at 29 February 2024 (28 February
2023: four; 31 August 2023: four).
A reconciliation of fair value measurement in Level 3 is set out below.
Level 3 financial assets at fair value through profit or loss
Six months Six months Year
ended ended ended
29 February 28 February 31 August
2024 2023 2023
(unaudited) (unaudited) (audited)
£’000 £’000 £’000
Opening fair value 942 3 3
(Loss)/gain on investments included in gains on investments in the Income Statement (939) – 939
Sale of investments included in gains on investments in the Income Statement (2) – –
--------------- --------------- ---------------
Closing balance 1 3 942
========= ========= =========
As at 29 February 2024, the investments in Sberbank, Fix Price Group and
Lukoil have been valued at a nominal value of £0.01 as the secondary listings
of depositary receipts of Russian companies have been suspended from trading.
The investment in Fix Price Group was previously valued at a nominal value of
£0.01. At 31 August 2023, the BlackRock Pricing Committee determined that
this investment should be valued at US$1.75 based on the price quotation
received from brokers in the OTC markets. At 29 February 2024, this investment
was revalued at a nominal value of £0.01.
For exchange listed equity investments, the quoted price is the bid price.
Substantially all investments are valued based on unadjusted quoted market
prices. Where such quoted prices are readily available in an active market,
such prices are not required to be assessed or adjusted for any business
risks, including climate change risk, in accordance with the fair value
related requirements of the Company’s financial reporting framework.
12. Related party disclosure
The Board consists of five non-executive Directors, all of whom are considered
to be independent by the Board. None of the Directors has a service contract
with the Company. The Chairman receives an annual fee of £46,500, the Chair
of the Audit and Management Engagement Committee receives an annual fee of
£37,000 and each of the other Directors receives an annual fee of £31,500.
The Senior Independent Director receives an additional fee of £1,000.
As at 29 February 2024, the following members of the Board hold shares in the
Company: Eric Sanderson held 4,000 ordinary shares, Peter Baxter held 11,000
ordinary shares, Ian Sayers held 4,000 ordinary shares and Paola Subacchi held
11,109 ordinary shares.
Since the period end and up to the date of this report there have been no
changes in Directors’ holdings.
The transactions with the Investment Manager and AIFM are stated in note 13.
Significant holdings
The following investors are:
a. funds managed by the BlackRock Group or are affiliates of BlackRock Inc.
(Related BlackRock Funds); or
b. investors (other than those listed in (a) above) who held more than 20% of
the voting shares in issue in the Company and are, as a result, considered to
be related parties to the Company (Significant Investors).
As at 29 February 2024
Total % of shares held by Related Total % of shares held by Significant Number of Significant Investors who
BlackRock Funds Investors who are not affiliates of are not affiliates of BlackRock Group or
BlackRock Group or BlackRock, Inc. BlackRock, Inc.
1.3 n/a n/a
As at 31 August 2023
Total % of shares held by Related Total % of shares held by Significant Number of Significant Investors who
BlackRock Funds Investors who are not affiliates of are not affiliates of BlackRock Group or
BlackRock Group or BlackRock, Inc. BlackRock, Inc.
1.4 n/a n/a
As at 28 February 2023
Total % of shares held by Related Total % of shares held by Significant Number of Significant Investors who
BlackRock Funds Investors who are not affiliates of are not affiliates of BlackRock Group or
BlackRock Group or BlackRock, Inc. BlackRock, Inc.
0.9 n/a n/a
13. Transactions with the Investment Manager and AIFM
BlackRock Fund Managers Limited (BFM) provides management and administration
services to the Company under a contract which is terminable on six months’
notice. BFM has (with the Company’s consent) delegated certain portfolio and
risk management services, and other ancillary services, to BlackRock
Investment Management (UK) Limited (BIM (UK)). Further details of the
investment management contract are disclosed in the Directors’ Report on
page 48 in the Annual Report and Financial Statements for the year ended 31
August 2023.
The investment management fee is levied quarterly based on a tiered basis:
0.85% per annum of the month-end net asset value up to £350 million and 0.75%
per annum of the month-end net asset value above £350 million. Up to and
including 31 December 2022, the investment management fee was levied
quarterly, based on 0.85% per annum of the net asset value on the last day of
each month. The investment management fee due for the six months ended 29
February 2024 amounted to £2,349,000 (six months ended 28 February 2023:
£2,094,000; year ended 31 August 2023: £4,442,000). At the period end,
£2,349,000 was outstanding in respect of the management fee (28 February
2023: £3,145,000; 31 August 2023: £3,426,000).
In addition to the above services, BIM (UK) provided the Company with
marketing services. The total fees paid or payable for these services for the
six months ended 29 February 2024 amounted to £77,000 excluding VAT (six
months ended 28 February 2023: £46,000; year ended 31 August 2023: £97,000).
Marketing fees of £117,000 excluding VAT were outstanding at 29 February 2024
(28 February 2023: £117,000; 31 August 2023: £168,000).
During the year, the Manager pays the amounts due to the Directors. These fees
are then reimbursed by the Company for the amounts paid on its behalf. As at
29 February 2024, an amount of £202,000 was payable to the Manager in respect
of Directors’ fees (28 February 2023: £111,000; 31 August 2023: £113,000).
The ultimate holding company of the Manager and the Investment Manager is
BlackRock, Inc., a company incorporated in Delaware, USA.
14. Contingent liabilities
There were no contingent liabilities at 29 February 2024 (28 February 2023:
none; 31 August 2023: none).
15. Publication of non statutory accounts
The financial information contained in this half yearly report does not
constitute statutory accounts as defined in Section 435 of the Companies Act
2006. The financial information for the six months ended 29 February 2024 and
28 February 2023 has not been audited.
The information for the year ended 31 August 2023 has been extracted from the
latest published audited financial statements, which have been filed with the
Registrar of Companies. The report of the auditor on those accounts contained
no qualification or statement under Sections 498 (2) or (3) of the Companies
Act 2006.
16. Annual results
The Board expects to announce the annual results for the year ending 31 August
2024 in early November 2024. Copies of the annual results announcement can be
obtained from the Secretary on 020 7743 3000 or cosec@blackrock.com. The
Annual Report should be available by November 2024 with the Annual General
Meeting being held in December 2024.
12 Throgmorton Avenue
London
EC2N 2DL
2 May 2024
For further information please contact:
Sarah Beynsberger, Director, Closed End Funds, BlackRock Investment Management
(UK) Limited – 020 7743 2639
Stefan Gries, Fund Manager, BlackRock Investment Management (UK) Limited –
020 7743 3000
Press enquires:
Ed Hooper, Lansons Communications
Tel: 020 7294 3620
E-mail: BlackRockInvestmentTrusts@lansons.com or EdH@lansons.com
END
The Half Yearly Financial Report will also be available on the BlackRock
website at www.blackrock.com/uk/brge. Neither the contents of the Manager’s
website nor the contents of any website accessible from hyperlinks on the
Manager’s website (or any other website) is incorporated into, or forms part
of, this announcement.
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