REG-BlackRock Throg Tst: Half-year Report <Origin Href="QuoteRef">THRG.L</Origin> - Part 2
24/07/2017 07:35
- Part 2: For the preceding part double click ID:nPRrLB9C1a
adopted by the European Union (EU). The supplementary
revenue and capital columns 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 disposed of
during the period.
The Company does not have any other comprehensive income. The net profit
disclosed above represents the Company’s total comprehensive income.
STATEMENT OF CHANGES IN EQUITY
for the six months ended 31 May 2017
Called up share capital £’000 Share premium account £’000 Special reserve £’000 Capital redemption reserve £’000 Capital reserves £’000 Revenue reserve £’000 Total £’000
For the six months ended
31 May 2017 (unaudited)
At 30 November 2016 4,026 21,049 35,272 11,905 219,011 10,284 301,547
Total comprehensive income:
Net profit for the period – – – – 80,576 3,977 84,553
Transactions with owners, recorded directly to equity:
Dividends paid* – – – – – (4,571) (4,571)
-------- -------- -------- -------- -------- -------- --------
At 31 May 2017 4,026 21,049 35,272 11,905 299,587 9,690 381,529
-------- -------- -------- -------- -------- -------- --------
For the six months ended
31 May 2016 (unaudited)
At 30 November 2015 4,026 21,049 35,272 11,905 204,521 9,570 286,343
Total comprehensive income:
Net profit for the period – – – – 2,395 2,743 5,138
Transactions with owners, recorded directly to equity:
Dividends paid** – – – – – (4,095) (4,095)
-------- -------- -------- -------- -------- -------- --------
At 31 May 2016 4,026 21,049 35,272 11,905 206,916 8,218 287,386
-------- -------- -------- -------- -------- -------- --------
For the year ended
30 November 2016 (audited)
At 30 November 2015 4,026 21,049 35,272 11,905 204,521 9,570 286,343
Total comprehensive income:
Net profit for the year – – – – 14,490 5,723 20,213
Transactions with owners, recorded directly to equity:
Dividends paid*** – – – – – (5,009) (5,009)
-------- -------- -------- -------- -------- -------- --------
At 30 November 2016 4,026 21,049 35,272 11,905 219,011 10,284 301,547
-------- -------- -------- -------- -------- -------- --------
* Final dividend of 6.25p per share for the year ended 30 November 2016,
declared on 17 February 2017 and paid on 29 March 2017.
** Final dividend of 5.60p per share for the year ended 30 November 2015,
declared on 12 February 2016 and paid on 5 April 2016.
*** Final dividend of 5.60p per share for the year ended 30 November 2015,
declared on 12 February 2016 and paid on 5 April 2016 and interim dividend of
1.25p per share for the year ended 30 November 2016, declared on 18 July 2016
and paid on 19 August 2016.
The transaction costs incurred on the acquisition and disposal of investments
are included within the capital reserves. Purchase and sale costs amounted to
£337,000 and £91,000 respectively for the period ended 31 May 2017 (six
months ended 31 May 2016: £250,000 and £64,000; year ended 30 November 2016:
£492,000 and £129,000).
STATEMENT OF FINANCIAL POSITION
as at 31 May 2017
Notes 31 May 2017 £’000 (unaudited) 31 May 2016 £’000 (unaudited) 30 November 2016 £’000 (audited)
Non current assets
Investments held at fair value through profit or loss 9 374,659 285,676 297,072
-------- -------- --------
Current assets
Other receivables 7,158 1,961 1,346
Cash and cash equivalents 8,452 2,331 5,509
Cash held on margin deposit with brokers 414 – 152
Derivative financial assets held at fair value through profit or loss 3,213 1,411 1,934
-------- -------- --------
19,237 5,703 8,941
-------- -------- --------
Total assets 393,896 291,379 306,013
-------- -------- --------
Current liabilities
Other payables (7,887) (2,633) (3,024)
Collateral held in respect of contracts for difference (2,442) (1,360) (1,423)
Derivative financial liabilities held at fair value through profit or loss (2,038) – (19)
-------- -------- --------
(12,367) (3,993) (4,466)
-------- -------- --------
Net current assets 6,870 1,710 4,475
-------- -------- --------
Net assets 381,529 287,386 301,547
====== ====== ======
Equity attributable to equity holders
Called up share capital 8 4,026 4,026 4,026
Share premium account 21,049 21,049 21,049
Capital redemption reserve 11,905 11,905 11,905
Special reserve 35,272 35,272 35,272
Capital reserves 299,587 206,916 219,011
Revenue reserve 9,690 8,218 10,284
====== ====== ======
Total equity 7 381,529 287,386 301,547
====== ====== ======
Net asset value per ordinary share 7 521.71p 392.98p 412.34p
====== ====== ======
CASH FLOW STATEMENT
for the six months ended 31 May 2017
Six months ended 31 May 2017 £’000 (unaudited) Six months ended 31 May 2016 £’000 (unaudited) Year ended 30 November 2016 £’000 (audited)
Net cash inflow from operating activities 7,781 4,312 8,663
----- ----- -----
Financing activities
Interest paid on CFDs (226) (227) (462)
Interest paid (1) (3) (3)
Dividends paid (4,571) (4,095) (5,009)
----- ----- -----
Net cash outflow from financing activities (4,798) (4,325) (5,474)
----- ----- -----
Increase/(decrease) in cash and cash equivalents 2,983 (13) 3,189
Effect of foreign exchange rate changes (40) – (24)
----- ----- -----
Change in cash and cash equivalents 2,943 (13) 3,165
Cash and cash equivalents at the start of period 5,509 2,344 2,344
----- ----- -----
Cash and cash equivalents at the end of the period 8,452 2,331 5,509
===== ===== =====
Comprised of:
Cash at bank 82 255 119
BlackRock's Institutional Cash Series plc – Sterling Liquidity Fund 8,370 2,076 5,390
----- ----- -----
8,452 2,331 5,509
===== ===== =====
RECONCILIATION OF NET PROFIT BEFORE TAXATION TO NET CASH FLOW FROM OPERATING
ACTIVITIES
for the six months ended 31 May 2017
Six months ended 31 May 2017 £’000 (unaudited) Six months ended 31 May 2016 £’000 (unaudited) Year ended 30 November 2016 £’000 (audited)
Operating activities
Net profit before taxation 84,565 5,144 20,220
Add back interest paid on CFDs 226 227 462
Add back finance cost 1 3 4
Profits on investments and CFDs held at fair value through profit or loss (including transaction costs) (86,514) (3,759) (17,512)
Net losses on foreign exchange 40 – 24
Sales of investments held at fair value through profit or loss 91,950 56,366 110,936
Purchases of investments held at fair value through profit or loss (93,081) (54,307) (110,369)
Realised losses on closure of CFDs (11,393) (13,719) (28,282)
Realised gains on closure of CFDs 22,396 16,670 35,038
Net realised losses on closure of futures (205) – (461)
Collateral received in respect of CFDs 1,019 126 189
Net movement in cash held on margin deposit with brokers (262) – (152)
(Increase)/decrease in other receivables (1,376) (495) 65
(Increase)/decrease in amounts due from brokers (4,436) 1,602 1,655
Increase in amounts due to brokers 364 172 106
Increase/(decrease) in other payables 4,499 (3,712) (3,253)
Taxation paid (12) (6) (7)
------ ------ ------
Net cash inflow from operating activities 7,781 4,312 8,663
====== ====== ======
NOTES TO THE FINANCIAL STATEMENTS
for the six months ended 31 May 2017
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 half yearly financial statements have been prepared using the same
accounting policies as set out in the Company’s Annual Report and Financial
Statements for the year ended 30 November 2016 which were prepared in
accordance with International Financial Reporting Standards (IFRS) as adopted
by the European Union and applied in accordance with International Accounting
Standard 34, ‘Interim Financial Reporting’.
Insofar as the Statement of Recommended Practice (SORP) for investment trust
companies and venture capital trusts issued by the Association of Investment
Companies (AIC), revised in November 2014 is compatible with IFRS, the
Financial Statements have been prepared in accordance with the guidance set
out in the SORP.
The Company’s investment in BlackRock’s Institutional Cash Series plc –
Sterling Liquidity Fund of £8,370,000 (31 May 2016: £2,076,000; 30 November
2016: £5,390,000) is managed as part of the Company’s cash management
policy and, accordingly, at 30 November 2016 this investment along with
purchases and sales of this investment has been classified in the Statement of
Financial Position and Cash Flow Statement as cash and cash equivalents. The
comparative figures as at 31 May 2016 in the Statement of Financial Position
and for the six months period ended 31 May 2016 in the Cash Flow Statement
have been amended to reflect this change.
3. INCOME
Six months ended 31 May 2017 £’000 (unaudited) Six months ended 31 May 2016 £’000 (unaudited) Year ended 30 November 2016 £’000 (audited)
Investment income:
UK listed dividends 2,984 2,662 5,835
UK listed dividends – special 326 294 403
UK scrip dividends 17 11 36
Overseas listed dividends 831 346 474
Overseas listed dividends – special 177 – 46
------ ------ ------
4,335 3,313 6,794
------ ------ ------
Income from contracts for difference 254 (20) 76
------ ------ ------
254 (20) 76
------ ------ ------
Interest receivable and other income:
Deposit interest – – 1
Underwriting commission 13 – –
------ ------ ------
13 – 1
------ ------ ------
Total income 4,602 3,293 6,871
===== ===== =====
Dividends and interest received in the period amounted to £3,233,000 and
£nil (six months ended 31 May 2016: £2,975,000 and £nil; year ended 30
November 2016: £6,364,000 and £1,000) respectively.
4. INVESTMENT MANAGEMENT AND PERFORMANCE FEES
Six months ended 31 May 2017 (unaudited) Six months ended 31 May 2016 (unaudited) Year ended 30 November 2016 (audited)
Revenue £’000 Capital £’000 Total £’000 Revenue £’000 Capital £’000 Total £’000 Revenue £’000 Capital £’000 Total £’000
Investment management fee 377 1,131 1,508 306 917 1,223 621 1,862 2,483
Performance fee - 4,587 4,587 - 235 235 – 768 768
----- ----- ----- ----- ----- ----- ----- ----- -----
Total 377 5,718 6,095 306 1,152 1,458 621 2,630 3,251
===== ===== ===== ===== ===== ===== ===== ===== =====
BlackRock Fund Managers Limited (BFM) provides management and administration
services to the Company under a contract which is terminable on six months’
notice.
Up to 31 July 2017, the terms of the existing investment management agreement
with BFM provide for a basic management fee, payable quarterly in arrears, of
0.7% per annum on the gross asset value of the Company’s long only portfolio
plus the gross value of the underlying equities, long and short (Performance
Fee Market Value), to which the Company is exposed through the CFD portfolio.
In addition, BFM is entitled to a performance fee of 10% of the net asset
value (total return) outperformance against the Numis Companies excluding AIM
(excluding Investment Companies) Index (the benchmark index) subject to a cap
of 1% of Performance Fee Market Value.
The investment management fee is allocated 75% to the capital column and 25%
to the revenue column of the Statement of Comprehensive Income in line with
the Board’s expected long term split of returns, in the form of capital
gains and income, respectively, from the investment portfolio. A performance
fee of £4,587,000 was accrued for the six months ended 31 May 2017 (six
months ended 31 May 2016: £235,000; year ended 30 November 2016: £768,000).
The performance fee has been wholly allocated to the capital column of the
Statement of Comprehensive Income, as performance has been predominantly
generated through the capital returns on the investment portfolio.
As announced on 24 July 2017, the Company has agreed revised management and
performance fee arrangements with BFM which are effective from 1 August 2017
for management fees and from 1 December 2017 for performance fees and the
aggregate cap on total fees. For further details, refer to the Chairman’s
Statement.
5. OTHER OPERATING EXPENSES
Six months ended 31 May 2017 £’000 (unaudited) Six months ended 31 May 2016 £’000 (unaudited) Year ended 30 November 2016 £’000 (audited)
Allocated to revenue:
Custody fee 3 4 7
Auditor’s remuneration:
– audit services 18 18 36
– other assurance services 6 6 6
Registrar’s fee 14 16 33
Broker fees 19 19 37
Depositary fees 23 19 39
Marketing fees 50 64 126
Marketing fee accrual written back (41) (34) (34)
Directors’ emoluments 87 68 150
Other administrative costs 57 58 119
-------- -------- --------
236 238 519
-------- -------- --------
Allocated to capital:
Transaction charges 8 8 18
-------- -------- --------
244 246 537
======== ======== ========
6. DIVIDENDS
The Board has declared an interim dividend of 2.00p per share payable on 23
August 2017 to shareholders on the register at 4 August 2017 (six months ended
31 May 2016, interim dividend of 1.25p per share paid on 19 August 2016 to
shareholders on the register at 29 July 2016.) This dividend has not been
accrued in the financial statements for the six months ended 31 May 2017 as,
under IFRS, interim dividends are not recognised until paid. Dividends are
debited directly to reserves.
7. EARNINGS AND NET ASSET VALUE PER ORDINARY SHARE
Total revenue and capital returns and per share are shown below and have been
calculated using the following:
Six months ended 31 May 2017 £’000 (unaudited) Six months ended 31 May 2016 £’000 (unaudited) Year ended 30 November 2016 £’000 (audited)
Net revenue profit attributable to ordinary shareholders (£’000) 3,977 2,743 5,723
Net capital profit attributable to ordinary shareholders (£’000) 80,576 2,395 14,490
-------- -------- --------
Total profit attributable to ordinary shareholders (£’000) 84,553 5,138 20,213
-------- -------- --------
Equity shareholders’ funds (£’000) 381,529 287,386 301,547
-------- -------- --------
The weighted average number of ordinary shares in issue during each period, on which the return per ordinary share was calculated was: 73,130,326 73,130,326 73,130,326
-------- -------- --------
The actual number of ordinary shares in issue at the end of each period, on which the net asset value per ordinary share was calculated was: 73,130,326 73,130,326 73,130,326
-------- -------- --------
Returns per share :
Revenue earnings per ordinary share 5.44p 3.75p 7.83p
Capital profit per ordinary share 110.18p 3.28p 19.81p
-------- -------- --------
Total earnings per ordinary share 115.62p 7.03p 27.64p
======== ======== ========
As at 31 May 2017 (unaudited) As at 31 May 2016 (unaudited) As at 30 November 2016 (audited)
Net asset value per ordinary share – basic and diluted 521.71p 392.98p 412.34p
-------- -------- --------
Ordinary share price 436.00p 332.00p 325.00p
======== ======== ========
The Company does not have any dilutive securities.
8. CALLED UP SHARE CAPITAL
Ordinary shares in issue number Treasury shares number Total shares number Nominal value £’000
Allotted, called up and fully paid share capital comprised:
Ordinary shares of 5p each:
At 1 December 2016 and 31 May 2017 73,130,326 7,400,000 80,530,326 4,026
There has been no change in the Company’s share capital during the period or
as at the date of this report.
9. VALUATION OF FINANCIAL INSTRUMENTS
Financial assets and financial liabilities are either carried in the Statement
of Financial Position at their fair value (investments and derivatives) or at
an amount which is a reasonable approximation of fair value (due from brokers,
dividends and interest receivable, due to brokers, accruals, cash at bank and
bank overdrafts). IFRS 13 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 2(c) and 2(d) as set out
in the Company’s Annual Report and Financial Statements for the year ended
30 November 2016.
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 in an active market for an identical
instrument. A financial instrument is regarded as quoted in an active market
if quoted prices are readily and regularly 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.
Level 2 – Valuation techniques used to price securities based on observable
inputs. Valuation techniques used for non-standardised financial instruments
such as options, currency swaps and other over-the-counter derivatives,
include the use of comparable recent arm’s length transactions, reference to
other instruments that are substantially the same, discounted cash flow
analysis, option pricing models and other valuation techniques commonly used
by market participants making the maximum use of market inputs.
Level 3 – Valuation techniques using significant unobservable inputs other
than quoted prices within Level 1. This category includes all instruments
where the valuation technique includes inputs not based on observable market
data and unobservable inputs could have a significant impact on the
instrument’s valuation. This category includes instruments that are valued
based on quoted prices for similar instruments where significant unobservable
adjustments or assumptions are required to reflect differences between the
instruments and instruments for which there is no active market. The level in
the hierarchy within 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.
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.
There has been no change to the valuation techniques during the period under
review or as at the date of this report.
CFDs have all been classified as Level 2 investments as their valuation has
been based on market observable inputs represented by the market prices of the
underlying quoted securities to which these contracts expose the Company and
relevant foreign currency exchange rates.
The table below sets out fair value measurements using IFRS 13 fair value
hierarchy.
Financial assets/(liabilities) at fair value through profit or loss at 31 May 2017 Level 1 £’000 Level 2 £’000 Level 3 £’000 Total £’000
Assets:
Equity investments 374,659 – – 374,659
Contracts for difference – long (gross exposure) – 74,865 – 74,865
Liabilities:
Index futures – short (gross exposure) – (3,663) – (3,663)
Contracts for difference – short (gross exposure) – (23,250) – (23,250)
-------- -------- -------- --------
374,659 47,952 – 422,611
======== ======== ======== ========
Financial assets at fair value through profit or loss at 31 May 2016 Level 1 £’000 Level 2 £’000 Level 3 £’000 Total £’000
Assets:
Equity investments 285,676 – – 285,676
Contracts for difference – long (gross exposure) – 44,988 – 44,988
Liabilities:
Index futures – short (gross exposure) – – – –
Contracts for difference – short (gross exposure) – (24,038) – (24,038)
-------- -------- -------- --------
285,676 20,950 – 306,626
======== ======== ======== ========
Financial assets/(liabilities) at fair value through profit or loss at 30 November 2016 Level 1 £’000 Level 2 £’000 Level 3 £’000 Total £’000
Assets:
Equity investments 297,072 – – 297,072
Contracts for difference – long (gross exposure) – 56,467 – 56,467
Liabilities:
Index futures – short (gross exposure) – (2,452) – (2,452)
Contracts for difference – short (gross exposure) – (23,260) – (23,260)
-------- -------- -------- --------
297,072 30,755 – 327,827
======== ======== ======== ========
There were no transfers between levels for financial assets and financial
liabilities during the period recorded at fair value as at 31 May 2017, 31 May
2016 and 30 November 2016. The Company did not hold any level 3 securities
throughout the financial period under review or as at 31 May 2017, 31 May 2016
or 30 November 2016.
10. 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)).
The investment management fee due to BFM for the six months ended 31 May 2017
amounted to £1,508,000 (six months ended 31 May 2016: £1,223,000; year ended
30 November 2016: £2,483,000). In addition the performance fee accrued for
the six months ended 31 May 2017 amounted to £4,587,000 (six months ended 31
May 2016: £235,000; year ended 30 November 2016: £768,000).
At the period end £1,508,000 was outstanding in respect of the investment
management fee (31 May 2016: £607,000; 30 November 2016: £656,000) and
£4,587,000 was accrued in respect of performance fees (31 May 2016:
£235,000; 30 November 2016: £768,000). Any final performance fee for the
full year ending 30 November 2017 will not crystallise and fall due until the
calculation date of 30 November 2017.
In addition to the above services, the Manager provides the Company with
marketing services. The total fees paid or payable for these services for the
six months to 31 May 2017 amounted to £9,000 including VAT (six months ended
31 May 2016: £30,000; year ended 30 November 2016: £92,000). Marketing fees
of £37,000 including VAT (31 May 2016: £165,000; 30 November 2016:
£113,000) were outstanding at 31 May 2017.
The Company has an investment in BlackRock’s Institutional Cash Series plc -
Sterling Liquidity Fund of £8,370,000 at 31 May 2017 (31 May 2016:
£2,076,000; 30 November 2016: £5,390,000).
11. RELATED PARTY DISCLOSURE
The Board consisted of six non-executive Directors at 31 May 2017, all of whom
are considered to be independent by the Board. Mr Stobart retired with effect
from 22 March 2017 and Mr Greenlees succeeded him as Chairman of the Audit
Committee on this date. The Chairman receives an annual fee of £36,000, the
Chairman of the Audit
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