BlackRock Income: Half-year Report
21/06/2023 16:20
BLACKROCK INCOME AND GROWTH INVESTMENT TRUST PLC
LEI: 5493003YBY59H9EJLJ16
HALF YEARLY FINANCIAL REPORT FOR THE SIX MONTHS ENDED 30 APRIL 2023
PERFORMANCE RECORD
For the six months ended 30 April 2023 For the year ended 31 October 2022
Performance (with dividends reinvested)
Net asset value per share (2) 14.8% -2.3%
Ordinary share price (2) 14.4% -7.0%
FTSE All-Share Index 12.5% -2.8%
========== ==========
As at 30 April 2023 As at 31 October 2022
Net assets (£’000) (1) 45,089 40,572
Net asset value per ordinary share (pence) 215.22 191.63
Ordinary share price (mid-market) (pence) 191.00 171.00
Discount to net asset value (2) 11.3% 10.8%
FTSE All-Share Index 8940.12 7945.76
========== ==========
For the six months ended 30 April 2023 For the six months ended 30 April 2022 Change %
Revenue
Net profit after taxation (£’000) 722 752 -4.0
Revenue earnings per ordinary share (pence) (3) 3.44 3.53 -2.5
Dividends (pence)
Interim 2.60 2.60 -
========== ========== ==========
(1) The change in net assets reflects portfolio movements, the
purchase of the Company’s own shares and dividends paid.
(2) Alternative Performance Measures, see Glossary in the Half Yearly
Financial Report.
(3) Further details are given in the Glossary in the Half Yearly
Financial Report.
CHAIRMAN’S STATEMENT
Dear Shareholder
Overview
I am pleased to report that our portfolio has performed well during the six
months to 30 April 2023, delivering a strong positive return and outperforming
our benchmark. It has also continued to provide shareholders with capital
growth and income during what has been a particularly turbulent first half to
the financial year.
The period was once again dominated by powerful macroeconomic drivers, as
stubborn inflation and the threat of a US banking crisis (and contagion in the
UK) acted to undermine already fragile market confidence, which had been
briefly buoyed by the mild winter averting an energy crisis in Europe. Swift
intervention by central banks did help stabilise markets. In the UK, double
digit inflation and persistent wage growth data left the Bank of England with
little option but to implement a 25 basis point rise in interest rates in May,
raising the base rate to 4.5%, the highest level since 2008. The central
bank’s own forecasts for the UK economy have improved, with a recession in
2023 now expected to be avoided. The UK market responded well to this revision
of UK GDP growth and performed strongly towards the end of our half year.
Sentiment was also aided by indications that the rate hiking cycle may be
nearing its peak, stronger than anticipated consumer spending data, and
China’s reopening, which was supportive of markets globally.
Performance
Against this challenging backdrop, the Company’s net asset value per share
(NAV) returned 14.8%, compared with the Company’s benchmark, the FTSE
All-Share Index (total return), which returned 12.5%. The Company’s share
price returned 14.4% (all percentages in Sterling with dividends reinvested).
Subsequent to the period end and as at 19 June 2023, the net asset value per
share of the Company has decreased by 2.9% from 215.22 pence per share to
209.01 pence per share and the Company’s share price has fallen by 1.8% from
191.00 pence per share to 187.50 pence per share. The Company’s Benchmark
Index has decreased by 2.8% over the same period.
Further information on the significant components of overall performance and
the changes to portfolio composition are set out in the Investment Manager’s
report below.
Revenue Profit and Dividends
Revenue profit for the period was 3.44 pence per share (six months to 30 April
2022: 3.53 pence per share), a small decrease of 2.5% year-on-year. The Board
is declaring an unchanged interim dividend of 2.60 pence per share which will
be paid on 1 September 2023 to shareholders on the Company’s register at the
close of business on 21 July 2023 (the ex-dividend date is 20 July 2023). I am
pleased to report that our interim dividend is fully covered by the revenue
generated during the six-month period to 30 April 2023.
Share Capital
The Directors recognise the importance to investors that the Company’s share
price should not trade at a significant discount to NAV, and therefore, in
normal market conditions, may use the Company’s share buy back, sale of
shares from treasury and share issuance powers to seek to ensure that the
share price does not differ excessively from the underlying NAV. During the
period the Company’s shares traded at an average discount of 8.8% and ended
the period at 11.3%. At the close of business on 19 June 2023 the discount had
narrowed to 10.3%.
A total of 222,118 ordinary shares were bought back and cancelled during the
period at an average price of 181.43 pence.
Gearing
The Company operates a flexible gearing policy which depends on prevailing
conditions and the outlook for the market. Gearing is subject to a maximum
level of 20% of net assets at the time of investment. As at 30 April 2023 the
Company had net gearing of 5.3%. Gearing levels and sources of funding are
reviewed regularly to ensure that the Company has access to the most
competitive borrowing rates available to it. The Company has a one-year
unsecured Sterling Revolving Credit Facility of £8,000,000 with The Bank of
New York Mellon (International) Limited, of which £4,000,000 is currently
drawn.
Shareholder Communication
The Board appreciates how important access to regular information is to our
shareholders. To supplement our Company website, we now offer shareholders the
ability to sign up to the Trust Matters newsletter which includes information
on the Company as well as news, views and insights. Further information on how
to sign up is included on the inside cover of the Half Yearly Financial
Report.
Outlook
As you will read in their report which follows below, your portfolio managers
expect economic and market volatility to remain a key theme as we move through
the second half of the financial year. In this challenging environment, they
favour companies that have resilience, robust balance sheets, strong cash
flows and, importantly, pricing power. They also believe weaker competitors
will flounder against a backdrop of demand weakness, wage inflation and margin
pressure. By contrast, companies which possess these characteristics will
prosper and consolidate their market position. Therefore, they remain focused
on bottom-up stock selection and are excited about the increasing
opportunities on offer.
Your Board remains fully supportive of our portfolio managers’ approach as
they continue to deliver on the Company’s investment objective of providing
growth in capital and income over the longer term.
GRAEME PROUDFOOT
Chairman
21 June 2023
INVESTMENT MANAGER’S REPORT
Performance
For the six months since 31 October 2022, the Company’s NAV returned 14.8%,
outperforming its Benchmark Index, the FTSE All-Share Index, which returned
12.5% over the same period.
Investment approach
In assembling the Company’s portfolio, we adopt a concentrated investment
approach to ensure that our best ideas contribute significantly to returns. We
believe that it is the role of the portfolio overall to generate an attractive
and growing yield alongside capital growth rather than every individual
company within the portfolio. This gives the Company increased flexibility to
invest where returns are most attractive. This approach results in a portfolio
which differs substantially from the Benchmark Index and in any individual
year the returns will vary, sometimes significantly from those of the
Benchmark Index. Over longer periods our objective is to achieve returns
greater than the Benchmark Index, but with lower volatility. The foundation of
the portfolio, approximately 70%, is in high free cash flow generating
companies that can sustain cash generation and pay growing dividends whilst
aiming to deliver a double-digit total return. Additionally, we look to
identify and invest 20% of the portfolio in ‘growth’ companies that have
significant barriers to entry and scalable business models that enable them to
grow consistently. We also look for turnaround companies, for around 10% of
the portfolio, which represent those companies that are out of favour with the
market, facing temporary challenges with high yields or very low valuations,
but with attractive recovery potential.
Market overview
Markets remained focused on interest rate policy, driven as much by the
quantum and duration of the moves as by the impact of the tightening in policy
over the last 15 months. Just after central bankers had been quick to reaffirm
their commitment to curbing inflation, markets were hit by fears of a banking
crisis, caused not by asset quality problems but by liquidity concerns: the
collapse of Silicon Valley Bank was triggered by a breath-takingly fast run on
deposits, which also pressurised regional banks in the United States of
America (US); Credit Suisse was, in turn, rescued by UBS with assistance from
the Swiss government; and finally the collapse of First Republic Bank in April
2023. The spike in volatility led market participants to question how much
further tightening was needed but also to wonder how much damage had already
been done. Despite this, UK equities made progress over the reporting period,
helped by lower commodity prices in Europe, China’s rapid reopening and
further signs that the domestic economy may be under less pressure than
feared.
There were few themes driving market performance although large-caps continued
to outperform small-cap and mid-cap indices. Domestic cyclicals performed
well: UK consumer spending habits proved more robust than expected, boosting
retailers and leisure stocks. In addition, towards the end of the period, we
saw a spike in mergers and acquisitions activity for UK companies,
particularly in the mid and small-cap space, with growing interest in the
attractive valuation discount seen across the UK market.
Contributors to and detractors from performance
The portfolio outperformed its Benchmark Index during the period driven by
strong stock specific factors. In Financial Services, 3i Group was the
contributor to relative portfolio performance as the company delivered strong
results with discount retailer Action performing very well over the Christmas
period. This drove a significant increase in 3i Group’s NAV which positively
surprised against expectations. Standard Chartered was another positive
contributor to performance during the period. Buoyed by some bid speculation,
the shares were supported by a mix of solid short-term results and greater
optimism from management in achieving their return on equity targets.
Elsewhere, several of the more defensive holdings within the Company performed
strongly including RELX, Reckitt, Tate & Lyle and Smith & Nephew where results
highlighted improved trading conditions and/or continued strong cash
generation. Amongst the smaller cap holdings within the portfolio, Games
Workshop, a recent addition to the portfolio, performed strongly in December
on the back of the announcement that the company formed an agreement in
principle with Amazon to develop film/TV projects with their Warhammer
franchise.
Pearson was a detractor from relative performance during the period; the
company was a very strong performer in 2022 and the beginning of 2023 saw some
consolidation in its share price, particularly after the announcement of the
impact of generative Artificial Intelligence (AI) at US peer Chegg. Watches of
Switzerland was another detractor from performance as the company’s share
price fell on the back of their Q3 results. While the sales growth slowed down
in Q3, this was predominantly driven by jewellery, which fell mainly as a
result of the company’s own decision not to discount and to hold its price
premium versus competition.
Moonpig, the online card and gifting platform, performed weakly as postal
strikes during the holiday period caused customers to fear that their cards
would not be delivered on time. EuroAPI, the European pharmaceutical
manufacturer, cut 2022 earnings expectations due to an issue with
documentation in their Budapest plant and disappointing volumes from a major
customer.
Use of gearing has been fairly consistent during the period which has ranged
between 3 to 8%.
Transactions
During the period we purchased Swiss pharmaceutical company, Roche Holding,
following a period of underperformance. We believe there is a good opportunity
to purchase a leading oncology franchise and research and development
capability at a very attractive valuation and supported by a strong balance
sheet. Similarly, we also purchased Admiral Group late in Q1 following a
period of weakness in the shares. We are starting to see the motor insurance
market stabilise following a period of volatility during COVID-19.
We funded these new holdings from sales in Equifax, Kone and Whitbread
following strong recent performance. Whilst Kone and Equifax have been
relatively recent additions, purchased in the second half of 2022, we have
been pleasantly surprised by the early strong performance. Both share prices
reached levels where we felt their prospects were well understood and
consequently used these to fund purchases later. We also meaningfully reduced
our position in British American Tobacco following its outperformance during
2022.
We also fully exited our remaining small position in Moonpig as we view the
relative strength of the balance sheets and revenue opportunities at some of
our other consumer facing holdings to be more attractive.
We added three new midcaps to the portfolio including Games Workshop, Howden
Joinery, and Watches of Switzerland following significant share price
underperformance due to a weakening consumer backdrop; we believe that these
are advantaged franchises which, aided by strong balance sheets, cash
generation and continued investment, will emerge from this downturn as
stronger competitors and with enhanced return prospects.
Outlook
Inflation has consistently surprised in its depth and breadth, driven by
resilient demand, supply chain constraints, and most importantly by rising
wages in more recent data. Central banks across the developed world continue
to unwind ten years of excess liquidity by tightening monetary policy,
desperate to prevent the entrenchment of higher inflation expectations.
Meanwhile, March saw the first signs of financial stress with the bankruptcy
of Silicon Valley Bank and Signature Bank in the US serving to highlight the
potential issues of the aggressive retrenchment of liquidity. Whilst the
ramifications of this crisis remain unclear, it is likely that credit
conditions and the availability of credit will continue to recede. This
strengthens our belief that companies with robust balance sheets capable of
funding their own growth will outperform. We are mindful of this and feel it
is incredibly important to focus on companies with strong, competitive
positions, at attractive valuations that can deliver in this environment.
The political and economic impact of the war in Ukraine has been significant
in uniting Europe and its allies, whilst exacerbating the demand/supply
imbalance in the oil and soft commodity markets. We are conscious of the
impact this has on the cost of energy, and we continue to expect divergent
regional monetary approaches with the US being somewhat more insulated from
the impact of the conflict, than for example, Europe. We also see the
potential for longer-term inflationary pressures from decarbonisation and
deglobalisation, the latter as geopolitical tensions rise more broadly across
the world.
We would expect broader demand weakness although the ‘scars’ of supply
chain disruption are likely to support parts of industrial capital expenditure
demand as companies seek to enhance the resilience of their supply chains. A
notable feature of our conversations with a wide range of corporates has been
the ease with which they have been able to pass on cost increases and protect
or even expand margins during 2022 as evidenced by US corporate margins
reaching 70-year highs. As we look ahead into the second half of 2023, we
believe demand will weaken as the transitory inflationary pressures start to
fade. This will mean that pricing conversations will become more challenging
despite continued pressure from wage inflation which may prove more
persistent. While this does not bode well for margins in aggregate, we believe
we will continue to see greater differentiation as corporates’ pricing power
will come under intense scrutiny.
The UK’s fiscal policy has somewhat diverged from the G7 as the present
government attempts to create stability after the severe reaction from the
“mini-budget”. The early signs of stability are welcome as financial
market liquidity has increased and the outlook, whilst challenging, has
improved. Although the UK stock market retains a majority of internationally
weighted revenues, the domestic facing companies have continued to be impacted
by this backdrop, notably financials, housebuilders and property companies.
The valuation of the UK market remains highly supportive as Sterling weakness
supports earnings of international companies, whilst UK companies are in many
cases at COVID-19 or Brexit lows in share price or valuation terms. Although
we anticipate further volatility ahead as earnings estimates moderate, we know
that in the course of time, risk appetites will return, and opportunities
emerge.
We continue to focus the portfolio on cash generative businesses with durable,
competitive advantages boasting strong leadership as we believe these
companies are best-placed to drive returns over the long term. We anticipate
economic and market volatility will persist throughout the year and we are
excited by the opportunities this will likely create by identifying those
companies using this cycle to strengthen their long-term prospects as well as
attractive turnaround situations.
ADAM AVIGDORI AND DAVID GOLDMAN
BLACKROCK INVESTMENT MANAGEMENT (UK) LIMITED
21 June 2023
TEN LARGEST INVESTMENTS
1 = AstraZeneca (2022: 1st)
Sector: Pharmaceuticals & Biotechnology
Market value: £3,574,000
Percentage of portfolio: 7.5% (2022: 8.4%)
AstraZeneca is an Anglo-Swedish multinational pharmaceutical group with its
headquarters in the UK. It is a science-led biopharmaceutical business with a
portfolio of products for major disease areas including cancer, cardiovascular
infection, neuroscience and respiration.
2 = Shell (2022: 2nd)
Sector: Oil & Gas Producers
Market value: £3,567,000
Percentage of portfolio: 7.5% (2022: 8.4%)
Shell is a global oil and gas company. The company operates in both Upstream
and Downstream industries. The Upstream division is engaged in searching for
and recovering crude oil and natural gas, the liquefaction and transportation
of gas. The Downstream division is engaged in manufacturing, distribution and
marketing activities for oil products and chemicals.
3 = RELX (2022: 3rd)
Sector: Media
Market value: £2,499,000
Percentage of portfolio: 5.3% (2022: 5.8%)
RELX is a global provider of professional information solutions that includes
publication of scientific, medical, technical and legal journals. It also has
the world’s leading exhibitions, conference and events business.
4 = Reckitt (2022: 4th)
Sector: Household Goods & Home Construction
Market value: £2,380,000
Percentage of portfolio: 5.0% (2022: 4.7%)
Reckitt is a global leader in consumer health, hygiene and household products.
Its products are sold in 200 countries and its 19 most profitable brands are
responsible for 70% of net revenues.
5 + 3i Group (2022: 8th)
Sector: Financial Services
Market value: £1,918,000
Percentage of portfolio: 4.0% (2022: 3.2%)
3i Group is a leading international investor focused on mid-market private
equity and infrastructure.
6 = Rio Tinto (2022: 6th)
Sector: Mining
Market value: £1,837,000
Percentage of portfolio: 3.9% (2022: 4.0%)
Rio Tinto is a metals and mining group operating in approximately 36 countries
around the world, producing iron ore, copper, diamonds, gold and uranium.
7 + Smith & Nephew (2022: 10th)
Sector: Health Care Equipment & Services
Market value: £1,532,000
Percentage of portfolio: 3.2% (2022: 2.9%)
Smith & Nephew develops and markets advanced medical devices. The company is
involved in orthopaedics, endoscopy and advanced wound management. The company
is in relatively economically defensive products with expected revenue growth
from the sale of medical science devices with market leading trauma and sports
medicine businesses which represent over 50% of revenues.
8 - Unilever (2022: 7th)
Sector: Personal Goods
Market value: £1,523,000
Percentage of portfolio: 3.2% (2022: 3.3%)
The consumer staples business operating in food, home and personal care has
strong positions in emerging markets, where long-term growth trends in various
countries that currently generate the majority of revenues.
9 + Phoenix Group (2022: 13th)
Sector: Life Insurance
Market value: £1,446,000
Percentage of portfolio: 3.1% (2022: 2.8%)
Phoenix Group is one of the largest providers of insurance services in the
United Kingdom. The company offers a broad range of pensions and savings
products to support people across all stages of the savings life cycle.
10 - Pearson (2022: 9th)
Sector: Media
Market value: £1,327,000
Percentage of portfolio: 2.8% (2022: 3.2%)
The education business has been taken over by a new management team who have
restricted the business and put focus on areas of growth including English
language learning and virtual books.
All percentages reflect the value of the holding as a percentage of total
investments as at 30 April 2023.
Percentages in brackets represent the value of the holding as at 31 October
2022.
Together, the ten largest investments represent 45.5% of total investments
(ten largest investments as at 31 October 2022: 48.4%).
DISTRIBUTION OF INVESTMENTS AS AT 30 APRIL 2023
ANALYSIS OF PORTFOLIO BY SECTOR
% of investments by market value % of Benchmark Index
Pharmaceuticals & Biotechnology 10.6 10.8
Support Services 10.6 3.4
Oil & Gas Producers 9.4 11.4
Media 8.1 3.5
Household Goods & Home Construction 7.5 1.1
Financial Services 7.4 4.1
Banks 7.1 8.8
Mining 6.0 0.3
Personal Goods 4.5 0.5
General Retailers 4.2 3.1
Non-Life Insurance 3.8 0.8
Health Care Equipment & Services 3.2 0.7
Life Insurance 3.1 2.7
Electronic & Electrical Equipment 3.0 1.0
Food Producers 2.8 0.6
Tobacco 2.0 3.5
Travel & Leisure 1.6 3.2
Gas, Water & Multiutilities 1.5 3.6
Fixed Line Telecommunications 1.4 1.6
Real Estate Investment Trusts 1.2 2.6
Leisure Goods 1.0 0.2
Sources: BlackRock and Datastream.
INVESTMENT SIZE
Number of investments % of investments by market value
<£1m 29 35.2
£1m to £2m 14 39.5
£2m to £3m 2 10.3
£3m to £4m 2 15.0
Source: BlackRock.
INVESTMENTS AS AT 30 APRIL 2023
Market value £’000 % of investments
Pharmaceuticals & Biotechnology
AstraZeneca 3,574 7.5
Roche Holding (1) 1,278 2.7
EuroAPI (1) 201 0.4
---------------- ----------------
5,053 10.6
========== ==========
Support Services
Rentokil Initial 1,308 2.8
Hays 1,069 2.3
Mastercard (1) 1,058 2.2
Ashtead Group 716 1.5
RS Group 611 1.3
Grafton Group 236 0.5
---------------- ----------------
4,998 10.6
========== ==========
Oil & Gas Producers
Shell 3,567 7.5
BP Group 601 1.3
Woodside Energy Group 296 0.6
---------------- ----------------
4,464 9.4
========== ==========
Media
RELX 2,499 5.3
Pearson 1,327 2.8
---------------- ----------------
3,826 8.1
========== ==========
Household Goods & Home Construction
Reckitt 2,380 5.0
Berkeley Group 835 1.8
Taylor Wimpey 343 0.7
---------------- ----------------
3,558 7.5
========== ==========
Financial Services
3i Group 1,918 4.0
Ashmore Group 713 1.5
Premier Asset Management Group 491 1.0
London Stock Exchange Group 434 0.9
---------------- ----------------
3,556 7.4
========== ==========
Banks
Standard Chartered 1,045 2.2
HSBC Holdings 1,017 2.1
NatWest 707 1.5
Lloyds Banking Group 601 1.3
---------------- ----------------
3,370 7.1
========== ==========
Mining
Rio Tinto 1,837 3.9
BHP 977 2.1
---------------- ----------------
2,814 6.0
========== ==========
Personal Goods
Unilever 1,523 3.2
Watches of Switzerland 594 1.3
---------------- ----------------
2,117 4.5
========== ==========
General Retailers
Next 916 1.9
WH Smith 687 1.4
Howden Joinery 433 0.9
---------------- ----------------
2,036 4.2
========== ==========
Non-Life Insurance
Admiral Group 1,061 2.2
Hiscox 733 1.6
---------------- ----------------
1,794 3.8
========== ==========
Health Care Equipment & Services
Smith & Nephew 1,532 3.2
---------------- ----------------
1,532 3.2
========== ==========
Life Insurance
Phoenix Group 1,446 3.1
---------------- ----------------
1,446 3.1
========== ==========
Electronic & Electrical Equipment
Oxford Instruments 834 1.7
Schneider Electric (1) 610 1.3
---------------- ----------------
1,444 3.0
========== ==========
Food Producers
Tate & Lyle 1,309 2.8
---------------- ----------------
1,309 2.8
========== ==========
Tobacco
British American Tobacco 969 2.0
---------------- ----------------
969 2.0
========== ==========
Travel & Leisure
Compass Group 463 1.0
Fuller Smith & Turner - A Shares 280 0.6
Patisserie Holdings (2) – –
---------------- ----------------
743 1.6
========== ==========
Gas, Water & Multiutilities
Centrica 713 1.5
---------------- ----------------
713 1.5
========== ==========
Fixed Line Telecommunications
BT Group 681 1.4
---------------- ----------------
681 1.4
========== ==========
Real Estate Investment Trusts
Big Yellow Group 567 1.2
---------------- ----------------
567 1.2
Leisure Goods ========== ==========
Games Workshop 496 1.0
---------------- ----------------
496 1.0
========== ==========
Total investments 47,486 100.0
========== ==========
(1 ) Non-UK listed investments.
(2) Company under liquidation.
All investments are in ordinary shares unless otherwise stated. The total
number of investments held at 30 April 2023 was 47 (31 October 2022: 45).
As at 30 April 2023, 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:
· Investment performance;
· Income/dividend;
· Gearing;
· Legal & regulatory compliance;
· Operational;
· Political;
· Market; and
· Financial.
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
October 2022. A detailed explanation can be found in the Strategic Report on
pages 32 to 34 and in note 16 on pages 88 to 93 of the Annual Report and
Financial Statements which are available on the website maintained by
BlackRock at: www.blackrock.com/uk/brig.
Certain financial markets have been negatively impacted by the ongoing
geopolitical tensions arising from Russia’s invasion of Ukraine and the
impact of the subsequent range of sanctions, regulations and other measures
which impaired normal trading in Russian securities. The Board and the
Investment Manager continue to monitor investment performance in line with the
Company’s investment objectives, and the operations of the Company and the
publication of net asset values are continuing.
In the view of the Board, other than those matters noted above, there have not
been any material changes to the fundamental nature of these risks since the
previous report and these principal risks and uncertainties, as summarised,
are as applicable to the remaining six months of the financial year as they
were to the six months under review.
GOING CONCERN
The Board remains mindful of the ongoing uncertainty surrounding the potential
duration of the war in Ukraine and its longer-term effects on the global
economy and the current heightened geopolitical risk. Nevertheless, 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.
For this reason, they continue to adopt the going concern basis in preparing
the financial statements. The Company has a portfolio of investments which are
considered to be readily realisable and is able to meet all of its liabilities
from its assets and income generated from these assets. Ongoing charges
(calculated as a percentage of average daily net assets and based on the
management fee and all other operating expenses, excluding finance costs,
direct transaction costs, custody transaction charges, VAT recovered,
taxation, prior year expenses written back and certain non-recurring items)
for the year ended 31 October 2022 were approximately 1.18%.
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 management fee payable
are set out in note 3 and note 11 below. The related party transactions with
the Directors are set out in note 10 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 the
applicable UK Accounting Standard FRS 104 ‘Interim Financial Reporting’;
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.
The 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 21 June 2023 and
the above responsibility statement was signed on its behalf by the Chairman.
GRAEME PROUDFOOT
FOR AND ON BEHALF OF THE BOARD
21 June 2023
INCOME STATEMENT FOR THE SIX MONTHS ENDED 30 APRIL 2023
Six months ended 30 April 2023 (unaudited) Six months ended 30 April 2022 (unaudited) Year ended 31 October 2022 (audited)
Notes Revenue £’000 Capital £’000 Total £’000 Revenue £’000 Capital £’000 Total £’000 Revenue £’000 Capital £’000 Total £’000
Gains/(losses) on investments held at fair value through profit or loss – 5,340 5,340 – 1,259 1,259 – (2,328) (2,328)
Gains/(losses) on foreign exchange – 5 5 – (1) (1) – 5 5
Income from investments held at fair value through profit or loss 2 900 – 900 902 – 902 1,742 169 1,911
Other income 2 42 – 42 4 – 4 28 – 28
---------------- ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- ----------------
Total income/(loss) 942 5,345 6,287 906 1,258 2,164 1,770 (2,154) (384)
========== ========== ========== ========== ========== ========== ========== ========== ==========
Expenses
Investment management fee 3 (30) (89) (119) (30) (89) (119) (59) (178) (237)
Other operating expenses 4 (161) (2) (163) (129) (3) (132) (265) (6) (271)
---------------- ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- ----------------
Total operating expenses (191) (91) (282) (159) (92) (251) (324) (184) (508)
========== ========== ========== ========== ========== ========== ========== ========== ==========
Net profit/(loss) on ordinary activities before finance costs and taxation 751 5,254 6,005 747 1,166 1,913 1,446 (2,338) (892)
Finance costs (23) (70) (93) (4) (13) (17) (16) (49) (65)
---------------- ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- ----------------
Net profit/(loss) on ordinary activities before taxation 728 5,184 5,912 743 1,153 1,896 1,430 (2,387) (957)
Taxation (charge)/credit (6) – (6) 9 – 9 8 – 8
---------------- ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- ----------------
Net profit/(loss) on ordinary activities after taxation 6 722 5,184 5,906 752 1,153 1,905 1,438 (2,387) (949)
========== ========== ========== ========== ========== ========== ========== ========== ==========
Earnings/(loss) per ordinary share (pence) 6 3.44 24.67 28.11 3.53 5.41 8.94 6.77 (11.24) (4.47)
========== ========== ========== ========== ========== ========== ========== ========== ==========
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/(loss) on ordinary activities for the period disclosed above
represents the Company’s total comprehensive income/(loss).
STATEMENT OF CHANGES IN EQUITY FOR THE SIX MONTHS ENDED 30 APRIL 2023
Note Called up share capital £’000 Share premium account £’000 Capital redemption reserve £’000 Capital reserve £’000 Special reserve £’000 Revenue reserve £’000 Total £’000
For the six months ended 30 April 2023 (unaudited)
At 31 October 2022 313 14,819 236 9,483 13,427 2,294 40,572
Total comprehensive income:
Net profit for the period – – – 5,184 – 722 5,906
Transactions with owners, recorded directly to equity:
Ordinary shares purchased for cancellation (2) – 2 – (401) – (401)
Share purchase costs – – – – (2) – (2)
Dividends paid (1) 5 – – – – – (986) (986)
---------------- ---------------- ---------------- ---------------- ---------------- ---------------- ----------------
At 30 April 2023 311 14,819 238 14,667 13,024 2,030 45,089
========== ========== ========== ========== ========== ========== ==========
For the six months ended 30 April 2022 (unaudited)
At 31 October 2021 315 14,819 234 11,870 13,843 2,387 43,468
Total comprehensive income:
Net profit for the period – – – 1,153 – 752 1,905
Transactions with owners, recorded directly to equity:
Ordinary shares purchased for cancellation (2) – 2 – (362) – (362)
Share purchase costs – – – – (2) – (2)
Dividends paid (2) – – – – – (981) (981)
---------------- ---------------- ---------------- ---------------- ---------------- ---------------- ----------------
At 30 April 2022 313 14,819 236 13,023 13,479 2,158 44,028
========== ========== ========== ========== ========== ========== ==========
For the year ended 31 October 2022 (audited)
At 31 October 2021 315 14,819 234 11,870 13,843 2,387 43,468
Total comprehensive (loss)/income:
Net (loss)/profit for the year – – – (2,387) – 1,438 (949)
Transactions with owners, recorded directly to equity:
Ordinary shares purchased for cancellation (2) – 2 – (414) – (414)
Share purchase costs – – – – (2) – (2)
Dividends paid (3) – – – – – (1,531) (1,531)
---------------- ---------------- ---------------- ---------------- ---------------- ---------------- ----------------
At 31 October 2022 313 14,819 236 9,483 13,427 2,294 40,572
========== ========== ========== ========== ========== ========== ==========
(1) Final dividend paid in respect of the year ended 31 October 2022
of 4.70p per share, declared on 2 February 2023 and paid on 15 March 2023.
(2) Final dividend paid in respect of the year ended 31 October 2021
of 4.60p per share, declared on 13 January 2022 and paid on 17 March 2022.
(3) Interim dividend paid in respect of the six months ended 30 April
2022 of 2.60p per share, declared on 22 June 2022 and paid on 1 September
2022. Final dividend paid in respect of the year ended 31 October 2021 of
4.60p per share, declared on 13 January 2022 and paid on 17 March 2022.
For information on the Company’s distributable reserves, please refer to
note 8 below.
BALANCE SHEET AS AT 30 APRIL 2023
Notes 30 April 2023 (unaudited) £’000 30 April 2022 (unaudited) £’000 31 October 2022 (audited) £’000
Fixed assets
Investments held at fair value through profit or loss 9 47,486 44,624 41,557
---------------- ---------------- ----------------
Current assets
Current tax asset 26 4 16
Debtors 373 441 589
Cash and cash equivalents 1,623 3,724 2,657
---------------- ---------------- ----------------
Total current assets 2,022 4,169 3,262
========== ========== ==========
Creditors – amounts falling due within one year
Bank loan (4,000) (4,000) (4,000)
Other creditors (419) (765) (247)
---------------- ---------------- ----------------
Total current liabilities (4,419) (4,765) (4,247)
---------------- ---------------- ----------------
Net current liabilities (2,397) (596) (985)
---------------- ---------------- ----------------
Net assets 45,089 44,028 40,572
========== ========== ==========
Capital and reserves
Called up share capital 7 311 313 313
Share premium account 14,819 14,819 14,819
Capital redemption reserve 238 236 236
Capital reserve 14,667 13,023 9,483
Special reserve 13,024 13,479 13,427
Revenue reserve 2,030 2,158 2,294
---------------- ---------------- ----------------
Total shareholders’ funds 6 45,089 44,028 40,572
========== ========== ==========
Net asset value per ordinary share (pence) 6 215.22 207.67 191.63
========== ========== ==========
STATEMENT OF CASH FLOWS FOR THE SIX MONTHS ENDED 30 APRIL 2023
Six months ended 30 April 2023 (unaudited) £’000 Six months ended 30 April 2022 (unaudited) £’000 Year ended 31 October 2022 (audited) £’000
Operating activities
Net profit/(loss) on ordinary activities before taxation 5,912 1,896 (957)
Add back finance costs 93 17 65
(Gains)/losses on investments held at fair value through profit or loss (5,340) (1,259) 2,328
(Gains)/losses on foreign exchange (5) 1 (5)
Sales of investments held at fair value through profit or loss 7,070 10,711 17,325
Purchases of investments held at fair value through profit or loss (7,124) (7,459) (15,424)
(Increase)/decrease in other debtors (206) (257) 29
Increase/(decrease) in other creditors 59 (3) (62)
Taxation on investment income (16) 16 3
---------------- ---------------- ----------------
Net cash generated from operating activities 443 3,663 3,302
========== ========== ==========
Financing activities
Ordinary shares purchased for cancellation (401) (300) (414)
Share purchase costs paid (2) (2) (2)
Interest paid (93) (17) (65)
Dividends paid (986) (981) (1,531)
---------------- ---------------- ----------------
Net cash used in financing activities (1,482) (1,300) (2,012)
========== ========== ==========
(Decrease)/increase in cash and cash equivalents (1,039) 2,363 1,290
Cash and cash equivalents at the beginning of the year 2,657 1,362 1,362
Effect of foreign exchange rate changes 5 (1) 5
---------------- ---------------- ----------------
Cash and cash equivalents at end of the year 1,623 3,724 2,657
========== ========== ==========
Comprised of:
Cash at bank 59 89 53
Cash Fund (1) 1,564 3,635 2,604
---------------- ---------------- ----------------
1,623 3,724 2,657
========== ========== ==========
(1 ) Cash Fund represents funds held on deposit with the
BlackRock Institutional Cash Series plc - Sterling Liquid Environmentally
Aware Fund.
NOTES TO THE FINANCIAL STATEMENTS FOR THE SIX MONTHS ENDED 30 APRIL 2023
1. PRINCIPAL ACTIVITY AND BASIS OF PREPARATION
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.
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 October 2022.
2. INCOME
Six months ended 30 April 2023 (unaudited) £’000 Six months ended 30 April 2022 (unaudited) £’000 Year ended 31 October 2022 (audited) £’000
Investment income:
UK dividends 789 794 1,447
UK special dividends – 33 96
UK property income distributions 8 5 11
Overseas dividends 103 70 188
---------------- ---------------- ----------------
Total investment income 900 902 1,742
========== ========== ==========
Other income:
Interest from Cash Fund 41 4 28
Deposit interest 1 – –
---------------- ---------------- ----------------
Total income 942 906 1,770
========== ========== ==========
Dividends and interest received in cash during the year amounted to £746,000
and £43,000 respectively (six months ended 30 April 2022: £725,000 and
£2,000; year ended 31 October 2022: £1,838,000 and £23,000).
No special dividends have been recognised in capital (six months ended 30
April 2022: £nil; year ended 31 October 2022: £169,000).
3. INVESTMENT MANAGEMENT FEE
Six months ended 30 April 2023 (unaudited) Six months ended 30 April 2022 (unaudited) Year ended 31 October 2022 (audited)
Revenue £’000 Capital £’000 Total £’000 Revenue £’000 Capital £’000 Total £’000 Revenue £’000 Capital £’000 Total £’000
Investment management fee 30 89 119 30 89 119 59 178 237
---------------- ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- ----------------
Total 30 89 119 30 89 119 59 178 237
========== ========== ========== ========== ========== ========== ========== ========== ==========
Under the terms of the investment management agreement, BFM is entitled to a
fee of 0.6% per annum of the Company’s quarter end market capitalisation.
The investment management fee is allocated 25% to the revenue account and 75%
to the capital account. There is no additional fee for company secretarial and
administration services.
4. OTHER OPERATING EXPENSES
Six months ended 30 April 2023 (unaudited) £’000 Six months ended 30 April 2022 (unaudited) £’000 Year ended 31 October 2022 (audited) £’000
Allocated to revenue:
Custody fees – – 1
Depositary fees 2 2 5
Audit fees (1) 15 15 29
Registrars’ fee 12 12 27
Directors’ emoluments 50 49 99
Marketing fees 7 7 13
Printing and postage fees 17 20 35
Legal and professional fees 34 3 12
London Stock Exchange fee 6 5 10
FCA fee 4 3 7
Prior year expenses written back (2) (1) – (2)
Other administration costs 15 13 29
---------------- ---------------- ----------------
161 129 265
========== ========== ==========
Allocated to capital:
Custody transaction costs (3) 2 3 6
---------------- ---------------- ----------------
163 132 271
========== ========== ==========
(1) No non-audit services were provided by the Company’s auditors in
the six months ended 30 April 2023 (six months ended 30 April 2022: none; year
ended 31 October 2022: none).
(2) Relates to other administration costs written back in the six
months ended 30 April 2023 (six months ended 30 April 2022: none; year ended
31 October 2022: other administration costs).
(3) For the six months ended 30 April 2023, expenses of £2,000 (six
months ended 30 April 2022: £3,000; year ended 31 October 2022: £6,000) 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 transaction costs incurred on the acquisition of investments amounted to
£30,000 for the six months ended 30 April 2023 (six months ended 30 April
2022: £42,000; year ended 31 October 2022: £75,000). Costs relating to the
disposal of investments amounted to £3,000 for the six months ended 30 April
2023 (six months ended 30 April 2022: £6,000; year ended 31 October 2022:
£9,000). All transaction costs have been included within capital reserves.
5. DIVIDEND
The Directors have declared an interim dividend of 2.60p per share for the
period ended 30 April 2023 payable on 1 September 2023 to shareholders on the
register on 21 July 2023. The total cost of the dividend based on 20,921,646
ordinary shares in issue at 19 June 2023 was £544,000 (30 April 2022:
£551,000).
In accordance with FRS102, 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.
6. EARNINGS/(LOSS) AND NET ASSET VALUE PER ORDINARY SHARE
Revenue, capital earnings/(loss) and net asset value per ordinary share are
shown below and have been calculated using the following:
Six months ended 30 April 2023 (unaudited) Six months ended 30 April 2022 (unaudited) Year ended 31 October 2022 (audited)
Net revenue profit attributable to ordinary shareholders (£’000) 722 752 1,438
Net capital profit/(loss) attributable to ordinary shareholders (£’000) 5,184 1,153 (2,387)
---------------- ---------------- ----------------
Total profit/(loss) attributable to ordinary shareholders (£’000) 5,906 1,905 (949)
========== ========== ==========
Total shareholders’ funds (£’000) 45,089 44,028 40,572
========== ========== ==========
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: 21,008,269 21,315,326 21,244,153
The actual number of ordinary shares in issue at the period end on which the net asset value was calculated was: 20,949,796 21,200,636 21,171,914
========== ========== ==========
Calculated on weighted average number of ordinary shares:
Revenue earnings per share (pence) – basic and diluted 3.44 3.53 6.77
Capital earnings/(loss) per share (pence) – basic and diluted 24.67 5.41 (11.24)
---------------- ---------------- ----------------
Total earnings/(loss) per share (pence) – basic and diluted 28.11 8.94 (4.47)
========== ========== ==========
As at 30 April 2023 (unaudited) As at 30 April 2022 (unaudited) As at 31 October 2022 (audited)
Net asset value per ordinary share (pence) 215.22 207.67 191.63
Ordinary share price (mid-market) (pence) 191.00 187.00 171.00
========== ========== ==========
There were no dilutive securities at 30 April 2023 (30 April 2022: none; 31
October 2022: none).
7. CALLED UP SHARE CAPITAL
Ordinary shares number Treasury shares number Total shares number Nominal value £’000
Allotted, called up and fully paid share capital comprised:
Ordinary shares of 1 pence each:
At 31 October 2022 21,171,914 10,081,532 31,253,446 313
Shares purchased for cancellation (222,118) – (222,118) (2)
---------------- ---------------- ---------------- ----------------
At 30 April 2023 20,949,796 10,081,532 31,031,328 311
========== ========== ========== ==========
In the six months ended 30 April 2023, 222,118 ordinary shares (six months
ended 30 April 2022: 198,206; year ended 31 October 2022: 226,928) were
purchased and subsequently cancelled for a total cost including expenses of
£403,000 (six months ended 30 April 2022: £364,000; year ended 31 October
2022: £416,000).
Since the period end and up to 15 June 2023, a further 41,542 ordinary shares
have been bought back and cancelled for a total cost including expenses of
£79,000.
8. RESERVES
The share premium account and capital redemption reserve are not distributable
reserves under the Companies Act 2006. The Company’s share premium account
was cancelled pursuant to shareholders’ approval of a special resolution at
the Company’s Annual General Meeting in 2002 and Court approval on 24
January 2002. The share premium account which totalled £61,852,000 was
transferred to a special reserve. This action was taken, in part, to ensure
that the Company had sufficient distributable reserves.
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 reserve may be used as distributable reserves for all purposes and, in
particular, the repurchase by the Company of its ordinary shares and for
payments as dividends. In accordance with the Company’s Articles of
Association, the special reserve, capital reserve and revenue reserve may be
distributed by way of dividend. The gain on the capital reserve arising on the
revaluation of investments of £7,153,000 (six months ended 30 April 2022:
gain of £4,735,000; year ended 31 October 2022: gain of £1,486,000) 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 the capital reserve (arising on
investments sold) and the revenue reserve may not be entirely distributable if
a loss occurred during the realisation of these investments.
9. 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 following information is not intended to be a comprehensive
summary of all risks and shareholders should refer to the Alternative
Investment Fund Managers’ Directive FUND 3.2.2R Disclosures which can be
found at www.blackrock.com/uk/brig for a more detailed discussion of the risks
inherent in investing in the Company.
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 its investments.
The current environment of heightened geopolitical risk given the war in
Ukraine has undermined investor confidence and market direction. In addition
to the tragic and devastating events in Ukraine, the war has constricted
supplies of key commodities, pushing prices up and creating a level of market
uncertainty and volatility which is likely to persist for some time.
Valuation of financial instruments
Financial assets and financial liabilities are either carried in the Balance
Sheet at their fair value (for investments) or at an amount which is a
reasonable approximation of fair value (for other assets and liabilities such
as due from brokers, dividends and interest receivable, due to brokers,
accruals, cash and cash equivalents, bank overdrafts and bank loans). 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 80 of the Annual Report and Financial
Statements for the year ended 31 October 2022.
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 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 Level
3 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
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 price related
risks, including climate risk, in accordance with the fair value related
requirements of the Company’s financial reporting framework.
The table below sets out fair value measurements using the FRS 102 fair value
hierarchy.
Financial assets at fair value through profit or loss Level 1 £’000 Level 2 £’000 Level 3 £’000 Total £’000
Equity investments at 30 April 2023 (unaudited) 47,486 – – 47,486
Equity investments at 30 April 2022 (unaudited) 44,624 – – 44,624
Equity investments at 31 October 2022 (audited) 41,557 – – 41,557
========== ========== ========== ==========
The Company held one Level 3 security during the six months ended 30 April
2023 (six months ended 30 April 2022: one; year ended 31 October 2022: one).
The investment in Patisserie Holdings has been valued at £nil as the company
is under liquidation.
There were no transfers between levels of financial assets and financial
liabilities recorded at fair value during the six months ended 30 April 2023,
six months ended 30 April 2022 and the year ended 31 October 2022.
10. RELATED PARTY DISCLOSURE
Directors’ emoluments
The Board consists of four non-executive Directors, all of whom are considered
to be independent of the Manager by the Board. None of the Directors has a
service contract with the Company. With effect from 1 November 2022, the
Chairman receives an annual fee of £31,750, the Audit Committee Chairman
receives an annual fee of £26,000 and each of the other Directors receives an
annual fee of £22,500.
At the period end and as at 15 June 2023 members of the Board held ordinary
shares in the Company as set out below:
Ordinary shares 15 June 2023 Ordinary shares 30 April 2023 Ordinary shares 31 October 2022
Graeme Proudfoot (Chairman) 60,000 60,000 60,000
Nicholas Gold 43,175 43,175 20,000
Charles Worsley (1) 987,539 987,539 987,539
Win Robbins 12,106 12,106 12,106
========== ========== ==========
(1) Including a non-beneficial interest of 655,550 ordinary shares.
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 30 April 2023
Total % of shares held by Related BlackRock Funds Total % of shares held by Significant Investors who are not affiliates of BlackRock Group or BlackRock, Inc. Number of Significant Investors who are not affiliates of BlackRock Group or BlackRock, Inc.
nil n/a n/a
As at 30 April 2022
Total % of shares held by Related BlackRock Funds Total % of shares held by Significant Investors who are not affiliates of BlackRock Group or BlackRock, Inc. Number of Significant Investors who are not affiliates of BlackRock Group or BlackRock, Inc.
nil n/a n/a
11. 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
pages 43 and 44 in the Annual Report and Financial Statements for the year
ended 31 October 2022.
The investment management fee is levied quarterly, based on 0.60% per annum of
the Company’s market capitalisation. The investment management fee due for
the six months ended 30 April 2023 amounted to £119,000 (six months ended 30
April 2022: £119,000; year ended 31 October 2022: £237,000). At the period
end, £119,000 was outstanding in respect of the investment management fee (30
April 2022: £180,000; 31 October 2022: £118,000).
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 30 April 2023 amounted to £7,000 including VAT (six months
ended 30 April 2022: £7,000; year ended 31 October 2022: £13,000). Marketing
fees of £18,000 including VAT were outstanding at 30 April 2023 (30 April
2022: £17,000; 31 October 2022: £11,000).
The Company holds an investment in the BlackRock Institutional Cash Series plc
- Sterling Liquid Environmentally Aware Fund of £1,564,000 (30 April 2022:
£3,635,000; 31 October 2022: £2,604,000) which has been presented in the
financial statements as a cash equivalent. This is a fund managed by a company
within the BlackRock Group.
The ultimate holding company of the Manager and the Investment Manager is
BlackRock, Inc., a company incorporated in Delaware, USA.
12. CONTINGENT LIABILITIES
There were no contingent liabilities at 30 April 2023 (30 April 2022: none; 31
October 2022: none).
13. PUBLICATION OF NON STATUTORY ACCOUNTS
The financial information contained in this Half Yearly Financial Report does
not constitute statutory accounts as defined in Section 435 of the Companies
Act 2006. The financial information for the six months ended 30 April 2023 and
30 April 2022 has not been audited.
The information for the year ended 31 October 2022 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.
14. ANNUAL RESULTS
The Board expects to announce the annual results for the year ended 31 October
2023, in December 2023. Copies of the results announcement can be obtained
from the Secretary on 020 7743 3000 or by email at cosec@blackrock.com. The
Annual Report and Financial Statements should be available in December 2023,
with the Annual General Meeting being held in March 2024.
BlackRock Investment Management (UK) Limited
12 Throgmorton Avenue
London
EC2N 2DL
21 June 2023
ENDS
The Half Yearly Financial Report will also be available on the BlackRock
website at http://www.blackrock.com/uk/brig. 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.
For further information please contact:
Melissa Gallagher, Managing Director Closed End Funds – Tel: 020 7743 3893
Emma Phillips, Media & Communications, BlackRock Investment Management (UK)
Limited – Tel: 020 7743 2922
Press enquires:
Ed Hooper, Lansons Communications
Tel: 020 7294 3620
E-mail: BlackRockInvestmentTrusts@lansons.com or EdH@lansons.com
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