Half-year Report
24/10/2024 10:47
BLACKROCK SMALLER COMPANIES TRUST plc
(LEI: 549300MS535KC2WH4082)
Half yearly financial announcement of results in respect of the six months
ended 31 August 2024
Performance Record
As at As at
31 August 29 February
2024 2024
Net asset value per ordinary share (debt at par value) (pence) 1 1,634.26 1,450.15
Net asset value per ordinary share (debt at fair value) (pence) 1 1,684.43 1,502.25
Ordinary share price (mid-market) (pence) 1 1,524.00 1,326.00
Deutsche Numis Smaller Companies plus AIM (excluding Investment Companies) Index 2 17,183.46 15,173.40
--------------- ---------------
Assets
Total assets less current liabilities (£’000) 839,263 755,721
Equity shareholders’ funds (£’000) 3 769,734 686,206
Ongoing charges ratio 4,5 0.8% 0.8%
Dividend yield 4 2.8% 3.2%
Gearing 4 10.6% 11.5%
========= =========
For the six For the six
months ended months ended
31 August 31 August
2024 2023
Performance (with dividends reinvested)
Net asset value per ordinary share (debt at par value) 2,4 14.6% -7.8%
Net asset value per ordinary share (debt at fair value) 2,4 13.9% -7.3%
Ordinary share price (mid-market) 2,4 17.0% -6.3%
Deutsche Numis Smaller Companies plus AIM (excluding Investment Companies) Index 2,4 13.2% -6.9%
========= =========
For the six For the six Change %
months ended months ended
31 August 31 August
2024 2023
Revenue and dividends
Revenue return per ordinary share 27.54p 25.11p +9.7
Interim dividend per ordinary share 15.50p 15.00p +3.3
========= ========= =========
1 Without dividends reinvested.
2 Total return basis with dividends reinvested.
3 The change in equity shareholders’ funds represents the portfolio
movements during the period and dividends paid.
4 Alternative Performance Measures, see Glossary contained within the Half
Yearly Financial Report. Full details setting out how calculations with
dividends reinvested are performed are set out in the Glossary contained
within the Half Yearly Financial Report.
5 Ongoing charges ratio calculated as a percentage of average daily net
assets and using 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 in accordance with AIC guidelines.
Chairman’s Statement for the six months ended 31 August 2024
Dear Shareholder
I am pleased to present to shareholders the half yearly financial report for
the six months ended 31 August 2024.
Performance
Investor sentiment and risk appetite, appear to have improved during the six
month period ended 31 August 2024 and UK equity markets continued their upward
trend. Market performance has been supported by a more benign economic
backdrop of falling inflation, lower cost of borrowing, rising consumer
confidence, high employment and strong wage growth. These factors have been
positive for our asset class and this momentum has been reflected in the
performance of our portfolio in the first six months of our financial year.
The Company’s net asset value (NAV) rose by 13.9%1,2,3 over the period under
review, to 1,684.43p per share, outperforming the Company’s benchmark, the
Deutsche Numis Smaller Companies plus AIM (excluding Investment Companies)
Index, which rose by 13.2%1,3 over the same period. The Company’s share
price rose by 17.0%1,3 to 1,524.00p per share over the same period. Looking at
the broader market environment, the FTSE 100 Index rose by 12.5%1 over the
period, the FTSE 250 Index rose by 12.6%1 and the FTSE All Share Index rose by
12.6%1. The performance of both the NAV and share price over the longer term
are illustrated in the table below.
Performance to 31 August 2024 6 Months 1 Year 3 Years 5 Years 10 Years
change change change change change
% % % % %
Net asset value per share (with dividends reinvested) 1,2 13.9 18.5 -20.1 28.6 123.9
Share price (with dividends reinvested) 1 17.0 23.9 -23.0 22.5 137.7
Benchmark (with dividends reinvested) 1 13.2 14.6 -14.1 26.4 61.6
1 Percentages in Sterling terms with dividends reinvested.
2 Debt at fair value.
3 Alternative Performance Measure, see Glossary contained within the Half
Yearly Financial Report.
Returns and dividends
Dividend revenue from portfolio companies increased this period, with the
Company’s revenue return per share for the six months ended 31 August 2024
up by 9.7% to 27.54p per share (compared to 25.11p revenue return per share
for the six months to 31 August 2023). After adjusting for the impact of
special dividends received, which amounted to 1.45p per share (31 August 2023:
2.02p per share), regular dividend income from portfolio companies increased
by 11.4% compared to 2023 levels.
The Board is mindful of the importance of our dividend to shareholders. The
Board is also cognisant of the benefits of the Company’s investment trust
structure which enables it to retain up to 15% of total revenue each year to
build up reserves which may be carried forward and used to pay dividends
during leaner times. The Company has substantial distributable reserves
(£703.3 million as at 31 August 2024, including revenue reserves of £18.9
million). To put this into context, the current level of annual dividend
distribution based on dividends declared in respect of the year ended 29
February 2024 amounted to £19.9 million. Accordingly, the Board is pleased to
declare an interim dividend of 15.50p per share (2023: 15.00p per share)
representing an increase of 3.3% over the previous interim dividend. The
interim dividend will be paid on 4 December 2024 to shareholders on the
Company’s register on 1 November 2024. The Board continues to monitor the
Company’s income levels and projected future dividend income streams closely
as the year proceeds and will make an assessment in respect of the final
dividend in due course, noting that it has the ability to utilise revenue
reserves should it deem this appropriate.
Gearing
The Company had the following borrowing facilities in place: long-term fixed
rate funding in the form of a £25 million senior unsecured fixed rate private
placement notes issued in May 2017 at a coupon of 2.74% with a 20 year
maturity, £20 million senior unsecured fixed rate private placement notes
issued in December 2019 at a coupon of 2.41% with a 25 year maturity and £25
million senior unsecured fixed rate private placement notes issued in
September 2021 at a coupon of 2.47% with a 25 year maturity. Shorter-term
variable rate funding consisted of an uncommitted overdraft facility of £60
million with The Bank of New York Mellon (International) Limited with interest
charged at SONIA plus 100 basis points.
It continues to be the Board’s intention that net gearing will not exceed
15% of the net assets of the Company at the time of the drawdown of the
relevant borrowings. Under normal operating conditions it is envisaged that
gearing will be within a range of 0%-15% of net assets. During the period net
gearing ranged between 10.5% to 12.8%. The Company’s net gearing stands at
10.9% of net assets as at 22 October 2024, well within our target range.
Management of share rating
During the period, the Company’s shares traded at an average discount to NAV
(with debt at fair value) of 10.5%. The discount ranged between 5.7% and 14.1%
and ended the period at 9.5%. The Company’s shares were trading at a
discount of 12.7% to NAV (with debt at fair value) as at close of business on
22 October 2024. During the period the Company bought back a total of 220,000
ordinary shares for a total consideration of £2,968,000 to be held in
treasury.
The Board believes that the share buyback activity undertaken has helped
reduce the volatility in our share rating, which currently stands at 12.7%
compared to an AIC UK Smaller Companies sector average of 12.2%. As we
navigate these more volatile and uncertain markets, your Board will continue
to monitor the Company’s share rating and may deploy its powers to buyback
the Company’s shares where it believes that it is in shareholders’
long-term best interests to do so. Shares are only bought back at a discount
to NAV which ensures that these transactions are accretive to the NAV per
share and enhance NAV returns for shareholders.
Since the period end and as at the date of this report, the Company has not
bought back any shares. The share buyback activity undertaken from 1 March
2024 contributed 0.1% to the NAV per share return over this period.
Outlook
Since the period end, and up until the close of business on 22 October 2024,
the Company’s NAV per share fell by -4.4%1,2 and the share price decreased
by -7.7%, whilst the benchmark fell by -2.6%1.
The smaller company landscape in the UK is truly diverse, with a wide range of
sectors represented and a large number of companies within our target
universe. Given our bottom-up investment approach, this is a fertile
environment for active stockpickers investing for long-term growth.
There are clearly a range of uncertainties impacting the current business
outlook, economic, political and geopolitical. While these uncertainties make
portfolio decisions more challenging, they also give our managers
opportunities to identify and select portfolio companies they see as strong
performers for the future. Lower interest rates are already helping an
improvement in business confidence while better economic policy clarity will
be important for short-term market sentiment.
Unemployment remains low, balance sheets remain strong, inflation is falling
(slower than we would like) and consumer confidence is improving. This
backdrop gives us more confidence that the earnings outlook for our portfolio
of companies is broadly positive although not with the level of robustness we
had originally hoped. The new government’s policies are unfortunately
proving to be less clear than expected and all eyes are on the upcoming budget
and the associated tax changes that may emerge. In the short term at least,
this is limiting the rate of improvement we had hoped in sectors that have
been important to our portfolio. Investor flows into the UK had markedly
improved after the July election but those flows have since fallen away as
investor confidence has receded, at least temporarily. Despite the hopes of
many investors, the new government has committed too many “own goals” and
markets will need more substantive information on developing policies before
they again show signs of real confidence.
Our Portfolio Manager’s focus on financially strong companies with
innovative and disruptive business models and market leading offerings should,
over time, see a return of the strong and consistent investment performance to
which our shareholders have become accustomed. But the current environment is
unsettled and there have been some earnings disappointments as well. Your
Board remains supportive of our current approach but the near-term road ahead,
like the real world, will have some tricky potholes.
If shareholders would like to contact me, please write to BlackRock Smaller
Companies Trust plc, Exchange Place One, 1 Semple Street, Edinburgh EH3 8BL
marked for the attention of the Chairman.
RONALD GOULD
Chairman
24 October 2024
Investment Manager’s Report for the six months ended 31 August 2024
Market Review
I always find the start of these reports difficult to write; where should the
emphasis be, what are the important events that have shaped markets, are there
one or two key facts that should be discussed before all others in order to
set the scene? The first six months of this financial year have offered so
much that it is even more challenging than normal to find a pithy
introduction. Focusing solely on markets we have seen the oscillation in
expectations between a hard and soft landing scenario, often pivoting on the
back of one single data point. We have seen interest rates start to reduce in
major economies, resulting in an enormous amount of intellectual capital spent
on whether it will be two or three cuts before the end of the year (newsflash
it doesn’t really matter as long as rates are heading down). The
geopolitical situation continues to worsen, with no end in sight to the
conflict in Ukraine, and new fronts opening up in the Middle East. The oil
price has fallen and risen in the face of changing demands expectations, to
then fall again on news the Saudis will pump all they can, and then rise again
on further Middle East tension. We have seen Biden’s campaign fall apart in
90 minutes of painful debate, Trump survives not one but two assassination
attempts, and the Labour party sweep to power with an overwhelming majority,
only to then have their first 100 days of power dominated by the £22 billion
black hole and plummeting popularity largely on the back of some sartorial
questions. In bond markets the initial decline in UK gilt yields, itself a
reflection of inflation being under control and interest rates beginning their
downward path, has now been scuppered over fears the new government will bend
fiscal rules and raise more debt than the market had expected. Whilst all of
these events are shaping daily news flow, the underlying themes of artificial
intelligence (“AI”) and climate change continue to spark debate globally,
and at points having a significant impact on market moves.
Performance Review
The Company has modestly outperformed its benchmark, producing an overall
return of 13.9% vs an index return of 13.2%.
On the positive side a number of the core holdings performed well. Investment
platform provider IntegraFin rallied in the period as positive sentiment
returned to financial markets, and the company reassured the market the issues
with their cost base were consigned to history. Publisher Bloomsbury
Publishing continued the recent run of upgrades, this time augmenting their
operating momentum with an accretive acquisition. Funding Circle, who provide
loans to Small and Medium-sized Enterprises (SMEs) in the UK announced the
disposal of their loss making US operations, and a significant return of
capital. The volatility within financial markets has been a boon to pension
consultant XPS Pensions, who have seen significant demand for their services
from pension trustees looking to understand the impact shifting yields are
having on their fund assets and liabilities.
In terms of the shares that have negatively impacted on performance, there are
three clear groups; the ones where trading has disappointed, the stocks we
didn’t own, and the stocks that are significant benchmark positions that
have performed well. With regard to stocks that suffered trading issues, the
main disappointment was media firm YouGov, which has seen competition in one
division leading to pricing pressure. Veterinary services provider CVS Group
has been impacted not by demand weakness, but by the announcement of a
Competition and Markets Authority (CMA) investigation into the industry. The
second group, stocks that we didn’t own that were beneficiaries of the spike
in M&A activity for UK listed companies and therefore hurt relative
performance, including video game service provider Keywords, and media
business Ascential. The final group, the large index constituents we didn’t
own that have done well, include the likes of ground services firm Keller,
spread betting provider Plus500, gaming software provider Playtech, and Bank
of Cyprus.
Transaction Activity
The UK consumer continues to see an improvement in disposable income, as wage
growth is running ahead of inflation. The Asda income tracker is currently
showing double digit year-on-year increases to household income, although
currently this is resulting in a higher savings ratio. As consumers become
more confident in the economic outlook we should see this manifest in
increased spending. In anticipation of this we have added to a number of names
within the leisure sector, including Dominos Pizza, Wetherspoons and Loungers.
The latter two of these have recently given positive updates on trading.
The new Labour government has a clear policy to build one and a half million
houses over five years. Whilst there has to be considerable risk with regards
to this number given the repeated failure of government policy to reach these
levels, to get anywhere close there will have to be significant improvements
in planning, and substantial investment in the supply chain. In conjunction
with lower interest rates spurring banks to become more competitive with
regard to mortgage pricing, we see a positive multi year backdrop for the
housebuilding and building product sectors. We have added to our position in
housebuilder MJ Gleeson, brick manufacturer Ibstock, paving supplier
Marshalls, and plumbing supplier Genuit.
The IPO (initial public offering) market has been frustratingly quiet in the
period, with the Company only taking part in Raspberry Pi, the designer and
manufacturer of Single Board Computers, and Rosebank, the new venture from the
former management team of Melrose. Given the timing of the budget it feels
unlikely we will see much issuance in the period to the end of this calendar
year, but are hopeful the New Year will see a more conducive environment for
capital market activity.
Whilst this year has seen an increase in takeover activity, the Company has
only benefitted from self-storage provider Lok’n Store Group, telecom
equipment supplier Spirent, and financial services firm Mattioli Woods.
We also sold positions in shipping broker Clarkson, where we felt near-term
operating momentum has possibly peaked, media business YouGov, which is seeing
increased competition leading to pricing pressure, and defence business
QinetiQ, where we had become concerned about the cash flow.
Outlook
It is almost impossible to address the outlook without addressing the change
of government in the UK. The Labour party swept to power with an overwhelming
majority, a mandate for change, and an ability to set long-term economic
policy. With the Labour party claiming to offer a more business-friendly
outlook this should have been a perfect set up for a market friendly
environment. Sadly, their early statements have instead generated increased
uncertainty as the market tries to understand how the government will shape
policy to fill the “£22 billion black hole”. With potential changes to
inheritance tax, pensions, and capital gains tax, investors are doing what
they traditionally do in the face of an information vacuum, selling. We, like
everyone else with exposure to the UK stock market, await budget day with keen
interest, and hope that once everyone has the certainty the budget will bring,
they will be able to position for the long term. And this long term is where
we have more conviction. As a consequence of the current uncertainty, consumer
confidence has recently weakened. However, in the background real wages are
rising, unemployment remains low, and household disposable income is
increasing, all suggesting that as confidence returns the consumer maintains
an ability to spend. Survey data suggests UK corporations are still positive
and are themselves awaiting clarity before deciding to invest. And that
clarity could (and should) come from the Labour Party, as they move away from
the budget and start to enact their agenda; developing the framework to build
one and a half million homes, investing in infrastructure and public services
whilst at the same time reducing waste, lifting the skills and education of
the workforce, and fostering innovation. On a global basis the more recent
economic data suggests a soft landing is still the likely outcome. Finally,
and importantly, the valuation of UK small and mid-cap companies is attractive
on an historic basis. As we move through this near-term noise, the opportunity
presented by the UK small and mid-cap market should be revealed, and maybe we
will finally see investors looking to allocate back to an asset class that has
historically been a profitable one.
ROLAND ARNOLD
BLACKROCK INVESTMENT MANAGEMENT (UK) LIMITED
24 October 2024
Twenty Largest Investments as at 31 August 2024
Company Business activity Market % of
value total
£’000 portfolio
IntegraFin Investment platform for financial advisers 22,312 2.6
Workspace Group Supply of flexible workspace to businesses in London 22,081 2.6
Hill & Smith Production of infrastructure products and supply of galvanizing services 21,671 2.5
Gamma Communications Provider of communication services to UK businesses 19,861 2.3
Breedon UK construction materials 19,727 2.3
Chemring Group Advanced technology products and services for the aerospace, defence and security markets 19,054 2.2
Bloomsbury Publishing Publisher of fiction and non-fiction 17,652 2.1
Tatton Asset Management Provider of discretionary fund management services to financial advisors 16,620 2.0
Baltic Classifieds Group Operator of online classified businesses in the Baltics 15,790 1.9
XPS Pensions Leading independent pensions consultancy and administration firm 14,669 1.7
4imprint Group Promotional merchandise in the US 14,306 1.6
Great Portland Estates British property development and investment company 13,366 1.6
GlobalData Data analytics and consulting company 12,866 1.5
Boku Digital payments company 12,838 1.5
Oxford Instruments Designer and manufacturer of tools and systems for industry and scientific research 12,622 1.5
TT Electronics Global manufacturer of electronic components 12,377 1.5
FRP Advisory A business advisory firm providing services in corporate restructuring, insolvency, debt advisory, and financial solutions to businesses 12,347 1.5
Ibstock Manufacture of clay bricks and concrete products 11,898 1.4
Johnson Service Group Provider of textile services 11,818 1.4
MJ Gleeson UK-based low-cost house builder and strategic land promoter 11,519 1.4
--------------- ---------------
Twenty largest investments 315,394 37.1
--------------- ---------------
Remaining investments 535,803 62.9
========= =========
Total 851,197 100.0
========= =========
Details of the full portfolio are available on the Company’s website at
www.blackrock.com/uk/brsc.
Portfolio holdings in excess of 3% of issued share capital
At 31 August 2024, the Company did not hold any equity investments comprising
more than 3% of any company’s share capital other than as disclosed in the
table below:
Security % of share capital held
Distribution Finance Capital Holdings 5.1
The Pebble Group 4.8
TT Electronics 4.3
Secure Trust Bank 3.9
Tatton Asset Management 3.9
Mercia Asset Management 3.5
Treatt 3.4
Luceco 3.4
MJ Gleeson 3.4
FRP Advisory 3.3
Robert Walters 3.2
Diaceutics 3.2
Central Asia Metals 3.1
Ultimate Products 3.1
Sylvania Platinum 3.1
Porvair 3.1
Bloomsbury Publishing 3.0
Fuller Smith and Turner – A Shares 3.0
Investment exposure as at 31 August 2024
Investment size
Number of investments Market value of investments as % of portfolio
£0m to £1m 2 0.1
£2m to £3m 3 0.9
£3m to £4m 12 5.0
£4m to £5m 13 6.9
£5m to £6m 13 8.5
£6m to £7m 7 5.2
£7m to £8m 9 8.1
£8m to £9m 14 13.9
£9m to £10m 4 4.5
£10m to £11m 6 7.3
£11m to £12m 5 6.7
£12m to £13m 5 7.4
£13m to £14m 1 1.6
£14m to £15m 2 3.4
£15m to £16m 1 1.9
£16m to £17m 1 2.0
£17m to £18m 1 2.1
£19m to £20m 3 6.9
£21m to £22m 1 2.5
£22m to £23m 2 5.1
Source: BlackRock.
Analysis of portfolio value by sector
Company Benchmark
(Deutsche Numis Smaller Companies, plus AIM
(ex Investment Companies) Index)
Other 0.0 0.8
Energy 1.4 4.4
Basic Materials 13.2 7.5
Industrials 30.5 21.7
Consumer Discretionary 15.4 18.0
Health Care 2.6 4.6
Consumer Staples 3.1 5.2
Telecommunications 4.2 3.8
Financials 20.6 18.2
Real Estate 3.0 5.9
Technology 6.0 9.1
Utilities 0.0 0.8
Sources: BlackRock and LSEG Datastream.
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;
· Market;
· Income/dividend;
· Legal and compliance;
· 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 29
February 2024. A detailed explanation can be found in the Strategic Report on
pages 33 to 37 and note 17 on pages 99 to 106 of the Annual Report and
Financial Statements which is available on the website maintained by BlackRock
at www.blackrock.com/uk/brsc.
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, 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 Board is mindful of the risk that unforeseen or unprecedented events
including (but not limited to) heightened geopolitical tensions such as the
wars in Ukraine and Middle East, their longer-term effects on the global
economy, high inflation and the current cost of living crisis could have a
significant impact on global markets. Notwithstanding this significant degree
of uncertainty, the Directors, having considered the nature and liquidity of
the portfolio, the Company’s investment objective, 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.
Related party disclosure and transactions with the AIFM and Investment 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 and
marketing fees payable are set out in notes 4 and 5 respectively and note 14
below. The related party transactions with the Directors are set out in note
15 below.
Directors’ Responsibility Statement
The Disclosure Guidance and Transparency Rules (DTR) 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 and belief 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 Financial Conduct Authority’s (FCA)
Disclosure Guidance and Transparency Rules.
The Half Yearly Financial Report has not been audited or reviewed by the
Company’s Auditor.
The Half Yearly Financial Report was approved by the Board on 24 October 2024
and the above Responsibility Statement was signed on its behalf by the
Chairman.
RONALD GOULD
FOR AND ON BEHALF OF THE BOARD
24 October 2024
Income Statement for the six months ended 31 August 2024
Six months ended Six months ended Year ended
31 August 2024 31 August 2023 29 February 2024
(unaudited) (unaudited) (audited)
Notes Revenue Capital Total Revenue Capital Total Revenue Capital Total
£’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000
Gains/(losses) on investments held at fair value through profit or loss – 88,199 88,199 – (69,846) (69,846) – (48,408) (48,408)
Losses on foreign exchange – (7) (7) – – – – (9) (9)
Income from investments held at fair value through profit or loss 3 14,494 798 15,292 13,385 782 14,167 21,884 782 22,666
Other income 3 – – – 155 – 155 379 – 379
--------------- --------------- --------------- --------------- --------------- --------------- --------------- --------------- ---------------
Total income/(loss) 14,494 88,990 103,484 13,540 (69,064) (55,524) 22,263 (47,635) (25,372)
========= ========= ========= ========= ========= ========= ========= ========= =========
Expenses
Investment management fee 4 (615) (1,845) (2,460) (564) (1,692) (2,256) (1,109) (3,328) (4,437)
Other operating expenses 5 (510) (14) (524) (439) (14) (453) (869) (21) (890)
--------------- --------------- --------------- --------------- --------------- --------------- --------------- --------------- ---------------
Total operating expenses (1,125) (1,859) (2,984) (1,003) (1,706) (2,709) (1,978) (3,349) (5,327)
========= ========= ========= ========= ========= ========= ========= ========= =========
Net profit/(loss) on ordinary activities before finance costs and taxation 13,369 87,131 100,500 12,537 (70,770) (58,233) 20,285 (50,984) (30,699)
Finance costs 6 (332) (900) (1,232) (237) (708) (945) (471) (1,408) (1,879)
--------------- --------------- --------------- --------------- --------------- --------------- --------------- --------------- ---------------
Net profit/(loss) on ordinary activities before taxation 13,037 86,231 99,268 12,300 (71,478) (59,178) 19,814 (52,392) (32,578)
========= ========= ========= ========= ========= ========= ========= ========= =========
Taxation (55) – (55) (88) – (88) (123) – (123)
--------------- --------------- --------------- --------------- --------------- --------------- --------------- --------------- ---------------
Net profit/(loss) on ordinary activities after taxation 12,982 86,231 99,213 12,212 (71,478) (59,266) 19,691 (52,392) (32,701)
========= ========= ========= ========= ========= ========= ========= ========= =========
Earnings/(loss) per ordinary share (pence) – basic and diluted 8 27.54 182.93 210.47 25.11 (146.99) (121.88) 40.70 (108.29) (67.59)
========= ========= ========= ========= ========= ========= ========= ========= =========
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) for the period disclosed above represents the
Company’s total comprehensive income/(loss).
Statement of Changes in Equity for the six months ended 31 August 2024
Notes Called Share Capital Capital Revenue Total
up share premium redemption reserves reserve £’000
capital account reserve £’000 £’000
£’000 £’000 £’000
For the six months ended 31 August 2024 (unaudited)
At 29 February 2024 12,498 51,980 1,982 601,098 18,648 686,206
Total comprehensive income:
Net profit for the period – – – 86,231 12,982 99,213
Transactions with owners, recorded directly to equity:
Ordinary shares repurchased into treasury – – – (2,940) – (2,940)
Share buyback costs – – – (28) – (28)
Dividends paid 1 7 – – – – (12,717) (12,717)
--------------- --------------- --------------- --------------- --------------- ---------------
At 31 August 2024 12,498 51,980 1,982 684,361 18,913 769,734
========= ========= ========= ========= ========= =========
For the six months ended 31 August 2023 (unaudited)
At 28 February 2023 12,498 51,980 1,982 673,479 18,590 758,529
Total comprehensive (loss)/income:
Net (loss)/profit for the period – – – (71,478) 12,212 (59,266)
Transactions with owners, recorded directly to equity:
Ordinary shares repurchased into treasury – – – (3,272) – (3,272)
Share buyback costs – – – (23) – (23)
Dividends paid 2 7 – – – – (12,395) (12,395)
--------------- --------------- --------------- --------------- --------------- ---------------
At 31 August 2023 12,498 51,980 1,982 598,706 18,407 683,573
========= ========= ========= ========= ========= =========
For the year ended 29 February 2024 (audited)
At 28 February 2023 12,498 51,980 1,982 673,479 18,590 758,529
Total comprehensive (loss)/income:
Net (loss)/profit for the year – – – (52,392) 19,691 (32,701)
Transactions with owners, recorded directly to equity:
Ordinary shares repurchased into treasury – – – (19,859) – (19,859)
Share buyback costs – – – (130) – (130)
Dividends paid 3 7 – – – – (19,633) (19,633)
--------------- --------------- --------------- --------------- --------------- ---------------
At 29 February 2024 12,498 51,980 1,982 601,098 18,648 686,206
========= ========= ========= ========= ========= =========
1 Final dividend paid in respect of the year ended 29 February 2024 of 27.00p
per share was declared on 14 May 2024 and paid on 27 June 2024.
2 Final dividend paid in respect of the year ended 28 February 2023 of 25.50p
was declared on 9 May 2023 and paid on 27 June 2023.
3 Interim dividend paid in respect of the year ended 29 February 2024 of
15.00p was declared on 26 October 2023 and paid on 4 December 2023. Final
dividend paid in respect of the year ended 28 February 2023 of 25.50p was
declared on 9 May 2023 and paid on 27 June 2023.
For information on the Company’s distributable reserves, please refer to
note 12.
Balance Sheet as at 31 August 2024
Notes 31 August 31 August 29 February
2024 2023 2024
(unaudited) (unaudited) (audited)
£’000 £’000 £’000
Non current assets
Investments held at fair value through profit or loss 13 851,197 753,759 765,178
Current assets
Current tax assets 132 177 210
Debtors 4,958 2,092 4,667
Cash and cash equivalents – 644 28
--------------- --------------- ---------------
Total current assets 5,090 2,913 4,905
========= ========= =========
Current liabilities
Bank overdraft (10,102) – (7,899)
Other creditors (6,922) (3,580) (6,463)
--------------- --------------- ---------------
Net current liabilities (11,934) (667) (9,457)
========= ========= =========
Total assets less current liabilities 839,263 753,092 755,721
========= ========= =========
Non current liabilities 9, 10 (69,529) (69,519) (69,515)
--------------- --------------- ---------------
Net assets 769,734 683,573 686,206
========= ========= =========
Total equity
Called up share capital 11 12,498 12,498 12,498
Share premium account 51,980 51,980 51,980
Capital redemption reserve 1,982 1,982 1,982
Capital reserves 684,361 598,706 601,098
Revenue reserve 18,913 18,407 18,648
--------------- --------------- ---------------
Total shareholders’ funds 8 769,734 683,573 686,206
========= ========= =========
Net asset value per ordinary share (debt at par value) (pence) 8 1,634.26 1,407.04 1,450.15
========= ========= =========
Net asset value per ordinary share (debt at fair value) (pence) 8 1,684.43 1,460.02 1,502.25
========= ========= =========
Statement of Cash Flows for the six months ended 31 August 2024
Six months Six months Year
ended ended ended
31 August 31 August 29 February
2024 2023 2024
(unaudited) (unaudited) (audited)
£’000 £’000 £’000
Operating activities
Net profit/(loss) on ordinary activities before taxation 99,268 (59,178) (32,578)
Add back finance costs 1,232 945 1,879
(Gains)/losses on investments held at fair value through profit or loss (88,199) 69,846 48,408
Net movement in foreign exchange 7 – 9
Sale of investments held at fair value through profit or loss 211,755 149,604 322,366
Purchase of investments held at fair value through profit or loss (207,606) (163,539) (327,895)
Net amount for capital special dividends received (798) (782) (782)
(Increase)/decrease in debtors (1,273) (771) 7
Increase/(decrease) in other creditors 409 (2,315) (1,280)
Taxation on investment income (55) (88) (123)
--------------- --------------- ---------------
Net cash generated from/(used in) operating activities 14,740 (6,278) 10,011
========= ========= =========
Financing activities
Ordinary shares repurchased into treasury (3,006) (3,295) (19,792)
Share buyback costs (28) – (130)
Interest paid (1,213) (924) (1,854)
Dividends paid (12,717) (12,395) (19,633)
--------------- --------------- ---------------
Net cash used in financing activities (16,964) (16,614) (41,409)
========= ========= =========
Decrease in cash and cash equivalents (2,224) (22,892) (31,398)
Cash and cash equivalents at beginning of the period/year (7,871) 23,536 23,536
Effect of foreign exchange rate changes (7) – (9)
--------------- --------------- ---------------
Cash and cash equivalents at end of period/year (10,102) 644 (7,871)
========= ========= =========
Comprised of:
Cash at bank – 644 –
Cash Fund 1 – – 28
Bank overdraft (10,102) – (7,899)
--------------- --------------- ---------------
(10,102) 644 (7,871)
========= ========= =========
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 31 August 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 29 February 2024.
3. Income
Six months Six months Year
ended ended ended
31 August 31 August 29 February
2024 2023 2024
(unaudited) (unaudited) (audited)
£’000 £’000 £’000
Investment income 1 :
UK dividends 11,921 9,686 16,538
UK special dividends 605 984 1,230
Property income dividends 841 558 1,058
Overseas dividends 1,049 2,157 3,058
Overseas special dividends 78 – –
--------------- --------------- ---------------
Total investment income 14,494 13,385 21,884
========= ========= =========
Other income:
Bank interest – 3 8
Interest from Cash Fund – 152 371
--------------- --------------- ---------------
– 155 379
--------------- --------------- ---------------
Total income 14,494 13,540 22,263
========= ========= =========
1 UK and overseas dividends are disclosed based on the country of domicile of
the underlying portfolio company.
Special dividends of £798,000 have been recognised in capital during the
period ended 31 August 2024 (six months ended 31 August 2023: £782,000; year
ended 29 February 2024: £782,000).
Dividends and interest received in cash during the period amounted to
£13,289,000 and £nil (six months ended 31 August 2023: £12,413,000 and
£231,000; year ended 29 February 2024: £21,699,000 and £447,000).
4. Investment management fee
Six months ended Six months ended Year ended
31 August 2024 31 August 2023 29 February 2024
(unaudited) (unaudited) (audited)
Revenue Capital Total Revenue Capital Total Revenue Capital Total
£’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000
Investment management fee 615 1,845 2,460 564 1,692 2,256 1,109 3,328 4,437
--------------- --------------- --------------- --------------- --------------- --------------- --------------- --------------- ---------------
Total 615 1,845 2,460 564 1,692 2,256 1,109 3,328 4,437
========= ========= ========= ========= ========= ========= ========= ========= =========
The investment management fee is based on a rate of 0.6% of the first £750
million of total assets (excluding current year income) less the current
liabilities of the Company (the “Fee Asset Amount”), reducing to 0.5%
above this level. The fee is calculated at the rate of one quarter of 0.6% of
the Fee Asset Amount up to the initial threshold of £750 million, and one
quarter of 0.5% of the Fee Asset Amount in excess thereof, at the end of each
quarter. The investment management fee is allocated 25% to the revenue account
and 75% to the capital account of the Income Statement.
5. Other operating expenses
Six months Six months Year
ended ended ended
31 August 31 August 29 February
2024 2023 2024
(unaudited) (unaudited) (audited)
£’000 £’000 £’000
Allocated to revenue:
Custody fees 5 5 10
Depositary fees 42 52 78
Auditor’s remuneration 29 34 50
Registrar’s fee 23 19 42
Directors’ emoluments 112 90 201
Director search fees – 18 35
Marketing fees 136 59 174
AIC fees 11 11 22
Bank charges 12 16 28
Broker fees 18 18 35
Stock exchange listings 21 17 34
Printing and postage fees 24 22 37
Legal fees 9 8 21
Prior year expenses written back 1 – (7) (1)
Other administrative costs 68 77 103
--------------- --------------- ---------------
510 439 869
========= ========= =========
Allocated to capital:
Custody transaction charges 2 14 14 21
--------------- --------------- ---------------
524 453 890
========= ========= =========
1 No expenses have been written back during the six month period ended 31
August 2024 (six months ended 31 August 2023: depositary fees and
miscellaneous fees; year ended 29 February 2024: miscellaneous fees).
2 For the six month period ended 31 August 2024, expenses of £14,000 (six
months ended 31 August 2023: £14,000; year ended 29 February 2024: £21,000)
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 £887,000 for the six months ended 31 August 2024 (six months
ended 31 August 2023: £708,000; year ended 29 February 2024: £1,393,000).
Costs relating to the disposal of investments amounted to £159,000 for the
six months ended 31 August 2024 (six months ended 31 August 2023: £113,000;
year ended 29 February 2024: £249,000). All direct transaction costs have
been included within capital reserves.
6. Finance costs
Six months ended Six months ended Year ended
31 August 2024 31 August 2023 29 February 2024
(unaudited) (unaudited) (audited)
Revenue Capital Total Revenue Capital Total Revenue Capital Total
£’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000
Interest on 2.74% loan note 2037 87 260 347 87 260 347 173 518 691
Interest on 2.41% loan note 2044 60 182 242 60 182 242 121 362 483
Interest on 2.47% loan note 2046 76 228 304 76 228 304 152 456 608
Interest on bank overdraft 105 220 325 10 28 38 17 52 69
2.74% Amortised loan note issue expenses 2 5 7 2 5 7 4 10 14
2.41% Amortised loan note issue expenses 1 2 3 1 2 3 2 5 7
2.47% Amortised loan note issue expenses 1 3 4 1 3 4 2 5 7
--------------- --------------- --------------- --------------- --------------- --------------- --------------- --------------- ---------------
Total 332 900 1,232 237 708 945 471 1,408 1,879
========= ========= ========= ========= ========= ========= ========= ========= =========
Finance costs have been allocated 25% to the revenue account and 75% to the
capital account of the Income Statement.
7. Dividends
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.
The Board has declared an interim dividend of 15.50p per share (31 August
2023: 15.00p per share), payable on 4 December 2024 to shareholders on the
Company’s register as at 1 November 2024; the ex dividend date is 31 October
2024. The total cost of this dividend, based on 47,099,792 shares in issue at
22 October 2024, is £7,300,000 (31 August 2023: £7,238,000).
8. Returns and net asset value per share
Revenue earnings, capital loss and net asset value per share are shown below
and have been calculated using the following:
Six months Six months Year
ended ended ended
31 August 31 August 29 February
2024 2023 2024
(unaudited) (unaudited) (audited)
Revenue return attributable to ordinary shareholders (£’000) 12,982 12,212 19,691
Capital profit/(loss) attributable to ordinary shareholders (£’000) 86,231 (71,478) (52,392)
--------------- --------------- ---------------
Total profit/(loss) attributable to ordinary shareholders (£’000) 99,213 (59,266) (32,701)
========= ========= =========
Total shareholders’ funds (£’000) 769,734 683,573 686,206
========= ========= =========
The weighted average number of ordinary shares in issue during the period on which the earnings per ordinary share was calculated was: 47,138,725 48,625,566 48,381,588
The actual number of ordinary shares in issue at the end of each period on which the undiluted net asset value was calculated was: 47,099,792 48,582,292 47,319,792
Earnings per share
Revenue earnings per share (pence) – basic and diluted 27.54 25.11 40.70
Capital earnings/(loss) per share (pence) – basic and diluted 182.93 (146.99) (108.29)
--------------- --------------- ---------------
Total earnings/(loss) per share (pence) – basic and diluted 210.47 (121.88) (67.59)
========= ========= =========
As at As at As at
31 August 31 August 29 February
2024 2023 2024
(unaudited) (unaudited) (audited)
Net asset value per ordinary share (debt at par value) (pence) 1,634.26 1,407.04 1,450.15
Net asset value per ordinary share (debt at fair value) (pence) 1,684.43 1,460.02 1,502.25
Ordinary share price (pence) 1,524.00 1,268.00 1,326.00
========= ========= =========
9. Borrowings
Six months Six months Year
ended ended ended
31 August 31 August 29 February
2024 2023 2024
(unaudited) (unaudited) (audited)
£’000 £’000 £’000
Amounts falling due after more than one year
2.74% loan note 2037 25,000 25,000 25,000
Unamortised loan note issue expenses (166) (189) (182)
--------------- --------------- ---------------
24,834 24,811 24,818
========= ========= =========
2.41% loan note 2044 20,000 20,000 20,000
Unamortised loan note issue expenses (130) (136) (133)
--------------- --------------- ---------------
19,870 19,864 19,867
========= ========= =========
2.47% loan note 2046 25,000 25,000 25,000
Unamortised loan note issue expenses (175) (156) (170)
--------------- --------------- ---------------
24,825 24,844 24,830
--------------- --------------- ---------------
Total borrowings 69,529 69,519 69,515
========= ========= =========
The fair value of the 2.74% loan note has been determined based on a
comparative yield for UK Gilts for similar duration maturity and spreads, and
as at 31 August 2024 equated to a valuation of 76.63p per note (31 August
2023: 72.24p; 29 February 2024: 74.55p), a total of £19,158,000 (31 August
2023: £18,060,000; 29 February 2024: £18,638,000). The fair value of the
2.41% loan note has been determined based on a comparative yield for UK Gilts
for similar duration maturity and spreads, and as at 31 August 2024 equated to
a valuation of 61.74p per note (31 August 2023: 59.30p; 29 February 2024:
60.55p), a total of £12,348,000 (31 August 2023: £11,860,000; 29 February
2024: £12,110,000). The fair value of the 2.47% loan note has been determined
based on a comparative yield for UK Gilts for similar duration maturity and
spreads, and as at 31 August 2024 equated to a valuation of 57.58p per note
(31 August 2023: 55.44p; 29 February 2024: 56.44p), a total of £14,395,000
(31 August 2023: £13,860,000; 29 February 2024: £14,110,000).
The £25 million loan note was issued on 24 May 2017. Interest on the note is
payable in equal half yearly instalments on 24 May and 24 November in each
year. The loan note is unsecured and is redeemable at par on 24 May 2037.
The £20 million loan note was issued on 3 December 2019. Interest on the note
is payable in equal half yearly instalments on 3 December and 3 June in each
year. The loan note is unsecured and is redeemable at par on 3 December 2044.
The second £25 million loan note was issued on 16 September 2021. Interest on
the note is payable in equal half yearly instalments on 16 March and 16
September each year. The loan note is unsecured and is redeemable at par on 16
September 2046.
The Company had in place a £35 million three year multi-currency revolving
loan facility with SMBC Bank International plc. This facility was terminated
on 25 November 2022 and any loan amounts repaid. As at 31 August 2022, the
facility was not utilised. Prior to the termination, interest on the facility
was reset every three months and was charged at the Sterling Overnight Index
Average rate (SONIA) plus a credit adjustment spread of 0.326% for one month
borrowings and 0.1193% for three month borrowings.
The Company also has available an uncommitted overdraft facility of £60
million with The Bank of New York Mellon (International) Limited, of which
£nil had been utilised at 31 August 2024 (31 August 2023: £nil; 29 February
2024: £nil).
The Company has complied with all covenants during the period related to the
loan and borrowings.
10. Reconciliation of liabilities arising from financing activities
Six months Six months Year ended
ended ended 29 February
31 August 31 August 2024
2024 2023 (audited)
(unaudited) (unaudited) £’000
£’000 £’000
Debt arising from financing activities:
Debt arising from financing activities at beginning of the period/year 69,515 69,504 69,504
--------------- --------------- ---------------
Cash flows:
Non-cash flows:
Amortisation of debenture and loan note issue expenses 14 15 11
--------------- --------------- ---------------
Debt arising from financing activities at end of the period/year 69,529 69,519 69,515
========= ========= =========
11. Called up share capital
Ordinary shares Treasury Total Nominal
in issue shares shares Value
(number) (number) (number) £’000
Allotted, called up and fully paid share capital comprised:
Ordinary shares of 25p each
At 29 February 2024 47,319,792 2,673,731 49,993,523 12,497
Ordinary shares bought back into treasury (220,000) 220,000 – –
--------------- --------------- --------------- ---------------
At 31 August 2024 47,099,792 2,893,731 49,993,523 12,497
========= ========= ========= =========
During the period ended 31 August 2024, the Company has bought back 220,000
shares into treasury for a total consideration of £2,968,000 (six months
ended 31 August 2023: bought back 247,500 shares for a total consideration of
£3,295,000; year ended 29 February 2024: bought back 1,510,000 shares for a
total consideration of £19,989,000.
Since 31 August 2024 and up to the latest practicable date of 22 October 2024
no further shares have been bought back.
The ordinary shares (excluding any shares held in treasury) carry the right to
receive any dividends and have one voting right per ordinary share. There are
no restrictions on the voting rights of the ordinary shares or on the transfer
of ordinary shares.
12. 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 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 such as dividends. In accordance with the
Company’s Articles of Association, the capital reserve and the revenue
reserve may be distributed by way of dividend. The gain on the capital reserve
arising on the revaluation of investments of £109,443,000 (31 August 2023:
gain of £18,222,000; 29 February 2024: gain of £35,601,000) 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.
13. 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.
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 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 bank
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 89 of the Annual
Report and Financial Statements for the year ended 29 February 2024.
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 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 the
measurement of Level 3 assets or liabilities.
Fair values of financial assets and financial liabilities
The table below is an 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 31 August 2024
(unaudited)
Level 1 Level 2 Level 3 Total
£’000 £’000 £’000 £’000
Equity investments 851,197 – – 851,197
--------------- --------------- --------------- ---------------
Total 851,197 – – 851,197
========= ========= ========= =========
Financial assets at fair value through profit or loss at 31 August 2023
(unaudited)
Level 1 Level 2 Level 3 Total
£’000 £’000 £’000 £’000
Equity investments 753,759 – – 753,759
--------------- --------------- --------------- ---------------
Total 753,759 – – 753,759
========= ========= ========= =========
Financial assets at fair value through profit or loss at 29 February 2024
(audited)
Level 1 Level 2 Level 3 Total
£’000 £’000 £’000 £’000
Equity investments 765,178 – – 765,178
--------------- --------------- --------------- ---------------
Total 765,178 – – 765,178
========= ========= ========= =========
There were no transfers between levels for financial assets during the period
recorded at fair value as at 31 August 2024, 31 August 2023 and 29 February
2024. The Company did not hold any Level 3 securities throughout the six month
period or as at 31 August 2024 (31 August 2023: none; 29 February 2024: none).
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.
14. 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 on page 49 of the Directors’ Report in the
Company’s Annual Report and Financial Statements for the year ended 29
February 2024.
The investment management fee payable for the six months ended 31 August 2024
amounted to £2,460,000 (six months ended 31 August 2023: £2,256,000; year
ended 29 February 2024: £4,437,000). At the period end, £3,569,000 was
outstanding in respect of the management fee (31 August 2023: £2,256,000; 29
February 2024: £3,319,000).
In addition to the above services, BIM (UK) has provided the Company with
marketing services. The total fees paid or payable for these services for the
six months ended 31 August 2024 amounted to £136,000 including VAT (six
months ended 31 August 2023: £59,000; year ended 29 February 2024:
£174,000). At the period end, £273,000 was outstanding in respect of the
marketing fees (31 August 2023: £196,000; 29 February 2024: £137,000).
During the period, 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
of 31 August 2024, an amount of £232,000 (31 August 2023: £196,000; 29
February 2024: £210,000) was payable to the Manager in respect of
Directors’ fees.
The Company had an investment in the BlackRock Institutional Cash Series plc
– Sterling Liquid Environmentally Aware Fund of £nil as at 31 August 2024
(31 August 2023: £nil; 29 February 2024: £28,000).
The ultimate holding company of the Manager and the Investment Manager is
BlackRock, Inc., a company incorporated in Delaware, USA.
15. Related party disclosure
Directors’ emoluments
As at 31 August 2024, the Board consisted of six 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. The Chairman receives
an annual fee of £50,000, the Audit Committee Chairman receives an annual fee
of £38,000, the Senior Independent Director receives a fee of £35,000 and
each of the other Directors receives an annual fee of £33,000.
As at 31 August 2024, an amount of £19,000 (31 August 2023: £15,000; 29
February 2024: £17,000) was outstanding in respect of Directors’ fees.
At the period end members of the Board held ordinary shares in the Company as
set out below:
As at As at As at
31 August 31 August 29 February
2024 2023 2024
Ordinary Ordinary Ordinary
shares shares shares
Ronald Gould (Chairman) 3,544 3,544 3,544
Susan Platts-Martin 2,800 2,800 2,800
Mark Little 491 491 491
James Barnes 2,500 2,500 2,500
Helen Sinclair 988 988 988
Dunke Afe 1 – – –
1 Ms Afe was appointed 1 January 2024.
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).
Total % of shares held by Total % of shares held by Number of Significant Investors
Related BlackRock Funds Significant Investors who are not who are not affiliates of BlackRock
affiliates of BlackRock Group or Group or BlackRock, Inc.
BlackRock, Inc.
As at 31 August 2024 5.92 n/a n/a
--------------- --------------- ---------------
As at 31 August 2023 9.19 n/a n/a
--------------- --------------- ---------------
As at 29 February 2024 9.70 n/a n/a
========= ========= =========
16. Contingent liabilities
There were no contingent liabilities at 31 August 2024, 29 February 2024 or 31
August 2023.
17. 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 31 August 2024
and 31 August 2023 has not been audited, or reviewed, by the Company’s
auditors.
The information for the year ended 29 February 2024 has been extracted from
the latest published audited financial statements, which have been filed with
the Registrar of Companies. The report of the auditor in those financial
statements contained no qualification or statement under Sections 498(2) or
(3) of the Companies Act 2006.
18. Annual results
The Board expects to announce the annual results for the year ending 28
February 2025 in early May 2025.
Copies of the results announcement can be obtained from the Secretary on 020
7743 3000 or at cosec@blackrock.com. The Annual Report should be available by
the beginning of May 2025 with the Annual General Meeting being held in June
2025.
The Annual Report and Financial Statements will also be available on the
BlackRock Investment Management website at http://www.blackrock.com/uk/brsc.
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:
Sarah Beynsberger, Director, Closed End Funds, BlackRock Investment Management
(UK) Limited
Tel: 020 7743 3000
Press Enquiries:
Ed Hooper, Lansons Communications
Tel: 020 7294 3620
E-mail:
BlackRockInvestmentTrusts@lansons.com or EdH@lansons.com
Copyright (c) 2024 PR Newswire Association,LLC. All Rights Reserved