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REG-BlackRock Throg Tst: Half-year Report

BlackRock Throgmorton Trust plc
(Legal Entity Identifier: 5493003B7ETS1JEDPF59)

Information disclosed in accordance with Article 5 Transparency Directive and
DTR 4.2

Half Yearly Financial Report for period ended 31 May 2018

REVISED INVESTMENT OBJECTIVE AND POLICY (with effect from 22 March 2018)
At a General Meeting of the Company held on 22 March 2018, an ordinary
resolution was duly passed by the Company adopting a revised investment
objective and policy. The Company’s new investment objective and policy is
set out below.

INVESTMENT OBJECTIVE
The Company’s objective is to provide shareholders with long term capital
growth and an attractive total return through investment primarily in UK
smaller and mid-capitalisation companies traded on the London Stock Exchange.

INVESTMENT POLICY
The Company’s performance is measured against the Numis Smaller Companies
plus AIM (excluding Investment Companies) Index (the Index).

The Investment Manager, BlackRock Investment Management (UK) Limited (BIM
(UK)), may invest in companies outside the Index without restriction subject
to the limits noted below.

The Company may hold up to 15% of its gross assets, at the time of
acquisition, in securities of companies which are listed or traded on a stock
exchange outside the UK.

In addition to holding long positions in securities, the Company is permitted
to employ leverage up to 30% of net assets, which it does primarily through
the use of contracts for difference (CFDs) and/or comparable equity
derivatives, rather than bank borrowings. This can be deployed into either
long or short CFDs and/or comparable equity derivatives, therefore enabling
the Company to have a maximum net market exposure of 130%.

In normal circumstances the Company will likely hold a mixture of long and
short CFDs and/or comparable equity derivatives that would result in a typical
net market exposure of between 100% and 115%((1)). In extremis, the Company
could deploy the full 30% of permissible leverage into short CFDs and/or
comparable equity derivatives, thereby reducing its overall net market
exposure to 70%.

Portfolio risk will be mitigated by investment in a diversified portfolio of
holdings. No more than 5% of the Company’s gross assets, at the time of
acquisition, may be invested in any one single holding, excluding holdings in
cash or money market funds where up to 10% of the Company’s gross assets may
be held.

The Company may also invest in collective investment vehicles. However, the
Company will not invest more than 10% of its gross assets, at the time of the
acquisition, in other listed closed-ended investment funds, unless such
companies have a stated investment policy not to invest more than 15% of their
gross assets in other listed closed-ended investment funds, in which case the
limit is 15% of gross assets.

The Board’s policy is that net gearing, borrowings less cash, should not
exceed 20% of gross assets. The Company expects to employ any leverage
primarily through its use of CFDs and/or comparable equity derivatives.

No material change will be made to the investment objective and policy without
shareholder approval.

(1) The AIC measures gearing at gross level, rather than net market exposure
level (i.e. gearing is calculated as borrowings + long CFDs and/or comparable
equity derivatives + short CFDs and/or comparable equity derivatives) and
therefore the published gearing figures will be higher than the typical net
market exposure of between 100% and 115%.

PERFORMANCE RECORD

FINANCIAL HIGHLIGHTS
 

 Attributable to ordinary shareholders                                         31 May 2018   30 November 2017   Change  
                                                                                (unaudited)          (audited)        % 
 Assets                                                                                                                 
 Net assets (£’000) (1)                                                             437,460            396,846    +10.2 
 Net asset value per ordinary share                                                 598.19p            542.66p    +10.2 
 -with dividend reinvested                                                                                        +11.6 
 Ordinary share price (mid-market)                                                  538.00p            457.50p    +17.6 
 -with dividend reinvested                                                                                        +19.3 
 Numis Smaller Companies plus AIM (excluding Investment Companies) Index (2)      15,296.88          14,938.01     +2.4 

   

                                                  For the six     For the six    Change  
                                                 months ended    months ended          % 
                                                  31 May 2018     31 May 2017            
                                                   (unaudited)     (unaudited)           
 Revenue                                                                                 
 Net revenue return after taxation (£’000)               5,214           3,977     +31.1 
 Earnings per ordinary share                             7.13p           5.44p     +31.1 
                                                      --------        --------  -------- 
 Dividend per ordinary share                                                             
 Interim                                                 2.50p           2.00p     +25.0 
                                                      --------        --------  -------- 

1.    The change in net assets reflects market movements during the period.

2.   With effect from 22 March 2018, the Numis Smaller Companies plus AIM
(excluding Investment Companies) Index replaced the Numis Smaller Companies
excluding AIM (excluding Investment Companies) Index as the Company’s
benchmark. From 1 December 2013 to 21 March 2018, the Company’s benchmark
was the Numis Smaller Companies excluding AIM (excluding Investment Companies)
Index.  Prior to 1 December 2013 the Company’s benchmark was the Numis
Smaller Companies plus AIM (excluding Investment Companies) Index. The
performance of the benchmark indices during these periods have been blended to
reflect these changes.

CHAIRMAN’S STATEMENT

PERIOD HIGHLIGHTS
*
Dan Whitestone appointed as sole Portfolio Manager
*
Outperformed the benchmark by 9.2%
*
Share price discount narrowed from 15.7% (as at 30 November 2017) to 10.1%
*
Revenue return up 31% year-on-year
*
Interim dividend declared of 2.50p per share, an increase of 25%
*
Revised investment objective and policy, including a new power to hold up to
15% in non-UK listed securities
*
Change of benchmark to the Numis Smaller Companies plus AIM (excluding
Investment Companies) Index

PERFORMANCE
It is encouraging to report that during the six months to 31 May 2018, the
Company has once again generated an exceptionally good investment performance
for its shareholders, both in relative and absolute terms. The Company’s Net
Asset Value (NAV) return for the period was 11.6%, compared with a return of
2.4% from the Company’s benchmark, the Numis Smaller Companies plus AIM
(excluding Investment Companies) Index, an outperformance of 9.2% (all figures
in sterling terms with dividend reinvested).

Further information on portfolio activity, the factors that contributed to
performance during the period and the outlook for the second half of the
financial year are set out in the Investment Manager’s Report.

PERFORMANCE RECORD TO 31 MAY 2018 (WITH DIVIDEND REINVESTED)
 

                                                            1 Year     3 Year     5 Year    Since BlackRock  
                                                           change %   change %   change %   take-on change % 
 Benchmark (with dividend reinvested)                           4.7       27.6       66.2              152.1 
 Share price (with dividend reinvested)                        25.8       73.2      141.6              388.1 
 NAV per share (with dividend reinvested) – undiluted          16.6       64.9      124.5              381.1 

Since the period end and up to the close of business on 24 July 2018, the NAV
has risen by 3.4%, and the benchmark index has fallen by 0.2%. (All figures
in sterling terms with dividend reinvested).

REVENUE RETURN AND DIVIDENDS
The revenue return per share for the period amounted to 7.13 pence per share,
compared to 5.44 pence per share earned during the comparative period last
year. This represents an increase of 31% and results from increases in the
level of both the ordinary and special dividends received during the period.
The Board is pleased to declare an interim dividend of 2.50 pence per share
(2017: 2.00 pence per share) payable on 29 August 2018 to shareholders on the
register on 3 August 2018 (ex-dividend date is 2 August 2018).

REVISED INVESTMENT ARRANGEMENTS
As set out in my Chairman’s Statement to the Annual Report for the year
ended 30 November 2017, Dan Whitestone assumed sole responsibility for the
portfolio management of the Company in February of this year.  The Company
subsequently convened a General Meeting of its shareholders on 22 March 2018
to consider a revised investment objective and policy and an ordinary
resolution adopting the new policy with effect from 22 March 2018 was duly
passed. In summary, the changes included a removal of the previous 35%
restriction on AIM market exposure, a change of the Company’s benchmark to
one which includes AIM and a new power to permit the portfolio manager to hold
up to 15% of the Company’s gross assets in non-UK listed securities.

The Company’s fundamental investment strategy has not changed and the Board
believes that, taken together, these steps will empower the portfolio manager
with the means to continue to deliver strong investment performance via a
uniquely attractive vehicle for investors seeking exposure to UK smaller
companies. Examples of how these new powers have been utilised are included in
the Investment Manager’s report. The Company’s revised investment
objective and policy is set out in full above. Although it is early days, it
is encouraging that these changes have resulted in continuing strong
investment performance.

SHARE PRICE DISCOUNT
During the six months to 31 May 2018, the Company’s share price discount to
NAV ranged between 17.0% and 7.4%, ending the period at 10.1% (2017: 20.8%,
15.1% and 16.4% respectively). As at 24 July 2018 the discount stood at 9.4%.
The constituents of the UK Smaller Companies sector have historically traded
at a significant discount to NAV and the Company’s average discount to NAV
since 1 July 2008 (the date BlackRock became Manager of the Company) has been
16.1%. It was pleasing to see that the Company’s discount has narrowed
significantly during the period and currently trades below the sector average.
The Board will continue to monitor closely the discount to NAV at which the
Company’s shares trade.

MODIFICATION TO PERFORMANCE FEE CALCULATION
The current approach to calculating the performance fee, as set out in the
Directors’ report in the Annual Report, is to measure NAV total return
performance against the benchmark before base management and performance fees
are deducted. Following discussions with the manager it has been agreed that
this basis should be modified so that from 1 June 2018 net asset value
performance against the benchmark will be measured after the deduction of the
base fee. Although the outcome of the two different approaches is not
material, the Board and the Manager believe that the latter basis is now more
common, and also presents a slightly more demanding hurdle before a
performance fee is earned.

OUTLOOK
Despite recent softening, global economic activity is expected to remain
robust during the second half of 2018. Corporate earnings remain strong,
particularly in the US. In the UK, equities are trading at near record highs
and inflation appears to be trending down towards the Bank of England’s 2%
target, which may bode well for the outlook for UK Small Cap companies. There
has also been an acceleration in UK wage growth in recent months and the
labour market has strengthened, with levels of employment hitting a record
high in May 2018.

These factors have offset some of the negative impact of the heightened
global and domestic political risk, concerns around the potential impact of
rising interest rates, and a general wind-down of the easy monetary policy
seen in recent years which will result in a tightening of liquidity. In
addition, the uncertainty around the ongoing Brexit negotiations with the
European Union remains a significant risk and there are indications that the
UK economy is starting to feel the effects of Brexit. Overall, the outlook for
the UK market, which even in the smaller companies sector, derives a
significant proportion of its revenue from overseas, appears reasonable and
the combination of low inflation, low unemployment and increasing earnings
should be supportive of UK economic growth.

Against this backdrop your Investment Manager will continue to seek to
identify opportunities, focusing on two types of investments that meet our
investment philosophy: first, differentiated long-term growth investments and
second, those companies that are leading industry change.

Christopher Samuel
Chairman
25 July 2018
 

INTERIM MANAGEMENT REPORT AND RESPONSIBILITY STATEMENT

The Chairman’s Statement and the Investment Manager’s report 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:
*
Performance;
*
Market;
*
Income/dividend;
*
Financial;
*
Operational; and
*
Regulatory.

The Board reported on the principal risks and uncertainties faced by the
Company in the Annual Report and Financial Statements for the year ended 30
November 2017. A detailed explanation can be found in the Strategic Report on
pages 11 and 12 and in note 16 on pages 59 to 69 of the Annual Report and
Financial Statements which are available on the website maintained by
BlackRock at blackrock.co.uk/thrg.

In the view of the Board, there have been no 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.

RELATED PARTY DISCLOSURE AND TRANSACTIONS WITH THE INVESTMENT MANAGER
BlackRock Fund Managers Limited (BFM) was appointed as the Company’s AIFM
with effect from 2 July 2014. BFM has (with the Company’s consent) delegated
certain portfolio and risk management services, and other ancillary services,
to BlackRock Investment Management (UK) Limited (BIM (UK)). Both BFM and BIM
(UK) are regarded as related parties under the Listing Rules. Details of the
fees payable are set out in note 4 and note 10.

The related party transactions with the Directors are set out in note 11.

GOING CONCERN
The Directors are satisfied that the Company has adequate resources to
continue in operational existence for the foreseeable future (being a period
of at least twelve months from the date that this half-yearly financial report
is approved) 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 is considered to be readily realisable and is
able to meet all of its liabilities from its assets and the income generated
from these assets. Ongoing charges (excluding performance fee and finance
costs) for the year ended 30 November 2017 were approximately 0.9% of net
assets.

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 that:
*
the condensed set of financial statements contained within the half yearly
financial report has been prepared in accordance with International Accounting
Standard 34 ‘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 been reviewed by the Company’s Auditors
and their report can be found at the end of this announcement.

The half yearly financial report was approved by the Board on 25 July 2018
and the above responsibility statement was signed on its behalf by the
Chairman.

Christopher Samuel
For and on behalf of the Board
25 July 2018

INVESTMENT MANAGER’S REPORT FOR THE SIX MONTHS ENDED 31 MAY 2018
 

MARKET REVIEW AND OVERALL INVESTMENT PERFORMANCE
Overall, the last six months have seen an increase in equity market volatility
from the extremely low levels witnessed in 2017. The first three months in
2018 saw significant declines in markets globally, followed by a sharp rebound
at the beginning of the second quarter. Economic data confirmed a moderate
pace of economic growth in the US, and the Federal Reserve reiterated the
likely path of monetary tightening for the remainder of the year. First
quarter earnings from the US came in strongly, with c.80% of companies beating
analysts’ expectations, and earnings remain on track to grow at the highest
rate in seven years, aided by tax reform. Eurozone data continues to signal
growth, however geopolitical events continued to dominate headlines, most
notably in Italy. Trade tensions continue to rise as the US announced tariffs
on trading partners around the world, with the emerging market complex being
most notably impacted. Evidence is building that the UK economy is now
starting to feel the effects of Brexit with the UK headline growth rate of
+0.1% quarter-on-quarter, the weakest since Q4 2012, with the year-on-year
figure now sitting at +1.2%.

PERFORMANCE REVIEW
The Company has made a strong start to the financial year, with the NAV per
share rising by 11.6% to 598.19p on a total return basis, significantly
outperforming the benchmark return of 2.4% and the FTSE 100 return of 7.0%
over the same period.

Despite the Company’s strong outperformance during the period, this has been
a difficult market environment to navigate. We have witnessed large swings in
geopolitical sentiment driving markets both higher and lower, however our
continued focus on company fundamentals has enabled the Company to benefit
from a number of stock specific successes in the long and short books. During
the six month period, the long book has been the predominant driver of
performance and the short book has been broadly flat, which we feel is a
strong result against a market rise of more than 2%, and reflects a number of
stock specific successes from our short positions.

The largest positive contributor during the period was Integrafin, a UK
savings platform for financial advisors, which delivered strong results
despite recent market volatility. This is a share we purchased at IPO earlier
in the year and where we subsequently increased our position, so it was
reassuring to see this conviction rewarded. We believe Integrafin has a
differentiated business model, owning its own technology and operating in an
industry with many secular growth drivers. Veterinary pharma manufacturer
Dechra Pharmaceuticals performed strongly over the period helped by the
acquisition of two inter-linked Dutch companies that specialise in enhanced
formulation companion animal products. Shares in FeverTree performed strongly
as the company continues to beat profit expectations.

As mentioned above, the Company has delivered a number of positive short
successes during the first half. The largest short contributor was from a
position in a UK wholesaler of alcoholic beverages, which in the space of a
couple of weeks issued negative profit revisions, announced an unexpected tax
bill to HMRC, an increase in its net debt position, and a failed capital
raise, before finally going into administration. This ended up being the fifth
largest contributor to performance over the six month period. Another short in
a UK roadside assistance company contributed positively as the shares have
been under pressure on growing fears about its balance sheet, whilst profit
expectations have been revised lower. As discussed in previous reports, we
remain structurally bearish on many consumer-facing UK domestic industries and
we believe many of these “value” areas offer poor value. This
positioning in aggregate has paid off, with a number of our UK
consumer-related short positions delivering some significant profit warnings,
which also provides us with confidence that the thesis behind this positioning
remains intact.

Turning our attention to what has not worked so well for the Company over the
period, the first positive to note is that the detractors during the period
have been limited. Of the largest 10 detractors to performance, half came from
shares that we do not own which did not meet our investment criteria or are in
sectors we are structurally underweight (e.g. Resources), as opposed to shares
where our analysis proved flawed. One share we did get wrong is Superdry, one
of the few UK consumer-facing shares we own. The company issued a
disappointing trading update showing that in-store sales had suffered from the
bad weather earlier in the year, while a shift in sales mix to lower margin
wholesale and clearance activity was impacting gross margins. The position is
currently under review and we have not added to it on this weakness. LED
lighting manufacturer Luceco fell in response to a trading update warning that
gross margin weakness, due to an incorrect assessment of stock, would hit 2017
earnings. We spoke with management to gain a better understanding of the issue
and have subsequently sold our holding. We also suffered from not owning
Fidessa, a UK software company we greatly admire (and should have owned),
which received several bid approaches during the period.

ACTIVITY
Since moving to the sole manager structure in February, we have continued to
increase the portfolio’s concentration by selling a number of smaller
lower-conviction holdings, including Headlam, Polypipe and Eurocell. We have
also reduced the portfolio’s exposure to resources whilst adding to a number
of the portfolio’s core ideas including Renishaw, Ascential, SSP, Sophos
Group and Restore.

As discussed in previous reports, we have become progressively more cautious
around the outlook for the UK economy and in particular those companies
exposed to UK consumer spending as not only do many investments here face
structural challenges, but will also face cyclical pressures from falling
consumer confidence and rising costs. Recent data continues to support this
thesis, therefore we have continued to reduce our exposure to this area of the
market.

Industry change remains a key focus of our investment philosophy, and an area
that we look to monetise on both the long and the short side. Any industry in
flux can create some very exciting opportunities, particularly within the UK
small and mid-cap universe where a number of disruptive winners emerge.
However, as we have alluded to in the past, industry disruption is not limited
by geography and therefore the ability for the Company to now invest up to 15%
in companies not listed in the UK provides further opportunity to identify
exciting growth companies that are driving change and disrupting their end
markets. One form of industry disruption we pay particular attention to is
distribution. As consumers, we can all observe (and benefit from) the changes
in distribution across many industries, from e-commerce to food delivery to
ordering a taxi. Two new international purchases we have made are companies
where distribution within their respective industries has been driven by the
advent of cloud computing. One is Xero, a dynamic and fast growing Australian
listed software company that specialises in accounting for small businesses.
The other is Ubisoft, a French listed video-game developer, benefitting not
only from strong content releases but from how that content is distributed,
i.e. a shift to direct distribution to the consumer via the cloud, as opposed
to a CD in a box sold through the retail channel.

The decision to remove the restriction on AIM listed shares earlier in the
year was made in order to further broaden the Company’s investment universe
and more importantly to ensure that we are no longer forced sellers of some of
our top performing AIM shares due to an arbitrary limit on the amount that the
Company is able to hold. During the period we have utilised this increased
flexibility, and our AIM weighting has increased to 40% (of the net
portfolio), through a combination of maintaining holdings in a number of
strongly performing AIM shares, and new purchases, such as Draper Esprit and
ASOS.

Within the short book we remain focused on identifying over-leveraged and
capital intensive businesses. The rising market also continues to present
short opportunities in many consumer services businesses facing structural
headwinds such as digital disruption or low cost/specialised formats, or
cyclical pressures, particularly in UK domestics, from falling demand and
rising costs pressures.

PORTFOLIO POSITIONING
Relative to our benchmark we are overweight Industrials, Healthcare and
Financials (excluding Banks). Within industrials our largest holdings include
Bodycote and Renishaw, both global businesses with strong and dominant market
positions exposed to positive trends. Within Healthcare our largest position
is Dechra Pharmaceuticals, the veterinary product manufacturer which is also
very internationally exposed, has a strong product suite and is exposed to
positive industry drivers. Our Financials exposure is to niche asset managers
like Polar Capital and Premier Asset Management, savings platform Integrafin,
and specialist non-life insurer, Hiscox.

We are broadly neutral Consumer Goods and Consumer Services, which is an
output of the opportunities that we are able to gain exposure to on both the
long and the short side. Disruption within distribution is one theme that we
are particularly drawn to, often evident within Consumer Services and Consumer
Goods. This presents a wave of exciting emerging companies which we are
exposed to on the long side, as well as creating pressures for many legacy
incumbent business models which we are short. We are underweight Mining and
Oil & Gas because many of these companies fail to meet our investment
criteria.

Our long book comprises many global companies. Where we have UK exposure it is
very targeted, either exposed to positive structural drivers for
example veterinary spend and affordable housing, or companies that are
consolidating fragmented end markets for example CVS Group and Restore.

Since the move to a sole manager there has been little radical change to the
overall shape of the portfolio, because we believe the key shares and sectors
where we see good long investment opportunities are the same. The key
differences are: 1) a reduction in our exposure to resources; 2) further
concentration behind core investment ideas; 3) a stronger focus on industry
change; 4) increasing international holdings; and 5) an increase in allocation
to AIM.

The short book still targets the same areas that we see as over-earning or
under structural or cyclical pressure. Many of our short positions are within
Consumer Services, either facing structural headwinds (digital disruption, low
cost or specialised formats) or cyclical pressures (weakening consumer demand
and rising cost pressures). The long book remains exposed to specific
investment cases, often where companies have harnessed the power and
convenience of technology in a capital light model that disrupts mature profit
pools.

OUTLOOK
Following the strong performance of the UK stock market in 2017 with low
levels of volatility, 2018 has been much more volatile with markets reacting
“more normally” to company newsflow, both positive and negative, as
opposed to continually grinding higher as we saw in the previous year.

The outlook for the UK domestic economy remains challenged and the recent
evidence would suggest it is deteriorating. This has had a notable impact on
the share prices of many domestic companies with several market participants
highlighting the value on offer. However, we think many of these UK consumer
shares are “bad value” and whilst many of them appear cheap on valuation
metrics like “price to adjusted earnings”, this fails to take into account
the levels of debt and poor cashflow some of these companies exhibit. In many
cases these same investments are also exposed to cyclical pressures (weakening
demand or rising cost pressures impacting corporate profit margins), and/or
structural pressures (digital disruption, or competition from low cost or
specialised formats).

As such we remain cautious on UK domestics in general, but remain positive on
the outlook for UK listed companies. We think the UK is home to many
compelling investment opportunities where the revenues and profits are
generated outside the UK and the companies have a leading differentiated
competitive offering. Notably, the outlook for these investments is tied to
the global economy which we believe remains robust. Our universe is well
diversified by sector and geography and there are ample opportunities to find
well managed, dynamic, differentiated companies that are market leaders
competing on a global basis.

Dan Whitestone
BlackRock Investment Management (UK) Limited
25 July 2018

TWENTY LARGEST INVESTMENTS AS AT 31 MAY 2018
 

 Company                              Market value £’000  % of net assets Description                                                                                            
 Ascential                                        12,465              2.8 Global business-to-business media company                                                              
 Dechra Pharmaceuticals                           11,906              2.7 Development and supply of pharmaceutical and other products focused on the veterinary market           
 Integrafin                                        9,861              2.3 UK savings platform for financial advisors                                                             
 Robert Walters                                    9,555              2.2 Provision of specialist recruitment services                                                           
 FeverTree Drinks*                                 9,478              2.2 Development and sale of soft drinks and mixers                                                         
 Restore*                                          9,246              2.1 Management of business information in both paper and digital form                                      
 YouGov*                                           9,241              2.1 Provision of research and consultancy services                                                         
 SSP                                               8,833              2.0 Operator of food and beverage concessions in travel locations                                          
 Bodycote                                          8,718              2.0 Provision of thermal processing services                                                               
 4imprint Group                                    8,688              2.0 Supply of promotional merchandise in the US                                                            
 Renishaw                                          8,667              2.0 Engineering and scientific technology company, with expertise in precision measurement and healthcare  
 CVS Group*                                        8,556              2.0 Operation of veterinary surgeries                                                                      
 Accesso Technology*                               8,543              1.9 Development and supply of ticketing and virtual queuing solutions                                      
 Hill & Smith                                      7,865              1.8 Production of infrastructure products and supply of galvanising services                               
 Advanced Medical Solutions*                       7,668              1.8 Development and manufacture of wound care and closure products                                         
 Sophos Group                                      7,535              1.7 Provider of cloud-enabled end-user and network security solutions                                      
 Hiscox                                            7,487              1.7 Provision of insurance services                                                                        
 Premier Asset Management Group*                   7,229              1.6 Retail asset management                                                                                
 Big Yellow                                        6,978              1.6 Provision of self-storage services                                                                     
 First Derivatives*                                6,886              1.6 Provider of software and consulting services to finance, technology and energy organisations           
                                                --------         --------                                                                                                        
 20 largest investments                          175,405             40.1                                                                                                        
                                                --------         --------                                                                                                        

*Traded on the Alternative Investment Market (AIM) of the London Stock
Exchange.
At 31 May 2018, the Company did not hold any equity interest representing more
than 3% of any company’s share capital.
The above investments may comprise long equity and long CFD positions.
A list of the Company’s investment positions is available on the
Company’s website.

ANALYSIS OF INVESTMENTS AS AT 31 MAY 2018
 

 Portfolio                                                                     Fair value (1)           Gross          Gross  
                                                                                         £’000         market         market  
                                                                                                 exposure (2)    exposure as  
                                                                                                         £’000    a % of net  
                                                                                                                   assets (3) 
 Long investment (excluding BlackRock’s Institutional Cash Fund) positions             434,372         510,329          116.6 
 Short investment positions                                                              1,828        (43,851)         (10.0) 
 Cash and cash equivalents (4)                                                           1,290        (28,988)          (6.6) 
 BlackRock’s Institutional Cash Fund (4)                                                 9,210           9,210            2.1 
 Other net current liabilities                                                         (9,240)         (9,240)          (2.1) 
                                                                                      --------        --------       -------- 
 Net assets                                                                            437,460         437,460          100.0 
                                                                                      --------        --------       -------- 

1.    Fair value is determined as follows:
–     Listed and AIM quoted investments are valued at bid prices where
available, otherwise at published price quotations.
–     The sum of the fair value for the CFD contracts included in long
and short investment positions above represents the fair valuation of all the
CFD contracts, which is determined based on the difference between the
purchase price and value of the underlying shares in the contract (in effect
the unrealised gains/(losses) on the exposed positions). The cost of
purchasing the securities held through long CFD positions directly in the
market would have amounted to £75,957,000 at the time of purchase, and
subsequent market rises in prices have resulted in unrealised gains on the CFD
contracts of £2,688,000 resulting in the value of the total market exposure
to the underlying securities rising to £78,645,000 as at 31 May 2018. The
notional price of selling the securities to which exposure was gained via the
short CFD positions would have been £45,679,000 at the time of entering into
the contract, and subsequent price falls have resulted in unrealised gains on
the short CFD positions of £1,828,000 and the value of the market exposure of
these investments decreasing to £43,851,000 at 31 May 2018. If the short
positions had been closed on 31 May 2018 this would have resulted in a gain of
£1,828,000 for the Company.
2.    Market exposure in the case of equity investments is the same as fair
value. In the case of CFDs it is the market value of the underlying shares to
which the portfolio is exposed via the contract.
3.    % based on the total market exposure.
4.    The gross market exposure column for cash and cash equivalents has
been adjusted to assume the Company traded direct holdings rather than
exposure being gained through CFDs.
A list of the Company’s investment positions is available on the
Company’s website.

DISTRIBUTION OF INVESTMENTS AS AT 31 MAY 2018
 

 Sector                                % of long   % of short    % of net  
                                        portfolio    portfolio   portfolio 
 Oil & Gas Producers                          1.8        (0.2)         1.6 
                                         --------     --------    -------- 
 Oil & Gas                                    1.8        (0.2)         1.6 
                                         --------     --------    -------- 
 Chemicals                                    2.5        (0.3)         2.2 
 Mining                                       1.0            –         1.0 
                                         --------     --------    -------- 
 Basic Materials                              3.5        (0.3)         3.2 
                                         --------     --------    -------- 
 Construction & Materials                     7.6        (0.7)         6.9 
 Aerospace & Defence                          1.6        (0.2)         1.4 
 General Industrials                          1.8        (0.3)         1.5 
 Electronic & Electrical Equipment            3.4        (0.4)         3.0 
 Industrial Engineering                       6.9        (0.3)         6.6 
 Industrial Transportation                    2.3            –         2.3 
 Support Services                            12.7        (0.9)        11.8 
                                         --------     --------    -------- 
 Industrials                                 36.3        (2.8)        33.5 
                                         --------     --------    -------- 
 Beverages                                    2.5            –         2.5 
 Food Producers                               0.8        (0.6)         0.2 
 Household Goods & Home Construction          2.7        (0.2)         2.5 
 Leisure Goods                                4.1            –         4.1 
 Personal Goods                               1.1        (0.5)         0.6 
                                         --------     --------    -------- 
 Consumer Goods                              11.2        (1.3)         9.9 
                                         --------     --------    -------- 
 Health Care Equipment & Services             3.0        (0.6)         2.4 
 Pharmaceuticals & Biotechnology              5.3            –         5.3 
                                         --------     --------    -------- 
 Health Care                                  8.3        (0.6)         7.7 
                                         --------     --------    -------- 
 General Retailers                            3.8        (1.9)         1.9 
 Media                                        9.1        (0.3)         8.8 
 Travel & Leisure                             4.5        (1.2)         3.3 
                                         --------     --------    -------- 
 Consumer Services                           17.4        (3.4)        14.0 
                                         --------     --------    -------- 
 Financial Services                          11.5        (0.2)        11.3 
 Non-life Insurance                           1.6            –         1.6 
 Real Estate Investment & Services            2.4            –         2.4 
 Real Estate Investment Trusts                5.4        (0.3)         5.1 
                                         --------     --------    -------- 
 Financials                                  20.9        (0.5)        20.4 
                                         --------     --------    -------- 
 Software & Computer Services                10.0        (0.3)         9.7 
                                         --------     --------    -------- 
 Technology                                  10.0        (0.3)         9.7 
                                         --------     --------    -------- 
 Total Investments                          109.4        (9.4)       100.0 
                                             ====         ====        ==== 

The above percentages are calculated based on the portfolio at 31 May 2018.
The net portfolio is calculated as long investment portfolio, less short CFD
portfolio.

ANALYSIS OF THE PORTFOLIO

                  Gross Basis (1)  Net Basis (2) 
 FTSE 250                   39.8%          35.4% 
 FTSE AIM                   34.0%          39.8% 
 FTSE Small Cap             17.7%          16.4% 
 International               3.8%           3.1% 
 Other                       3.6%           4.0% 
 FTSE 100                    1.1%           1.3% 

Source: BlackRock
1.
Long portfolio exposure plus short portfolio exposure aggregate excluding
investment in BlackRock’s Institutional Cash Fund.
2.
Long portfolio exposure less short portfolio exposure excluding investment in
BlackRock’s Institutional Cash Fund.

MARKET CAPITALISATION AS AT 31 MAY 2018

                     Long positions  Short positions 
 £1bn+                        51.8%            -5.5% 
 £400m – £1bn                 36.2%            -2.2% 
 £100m – £400m                21.4%            -1.7% 
 £0m – £100m                   0.0%             0.0% 

Net portfolio is calculated as long investment portfolio less short investment
portfolio.

All investments are in equity shares unless otherwise stated.

POSITION SIZE AS AT 31 MAY 2018

                 Long positions  Short positions 
 £2m+                        91               -4 
 £1m – £2m                   27              -20 
 £0m – £1m                    6              -14 

Source: BlackRock.

STATEMENT OF COMPREHENSIVE INCOME FOR THE SIX MONTHS ENDED 31 MAY 2018
 

                                                                                               Revenue £’000                                     Capital £’000                                      Total £’000                    
                                                                       Notes  Six months ended   Six months ended        Year   Six months ended   Six months ended        Year   Six months ended   Six months ended        Year  
                                                                                      31.05.18           31.05.17       ended           31.05.18           31.05.17       ended           31.05.18           31.05.17       ended  
                                                                                    (unaudited)        (unaudited)   30.11.17         (unaudited)        (unaudited)   30.11.17         (unaudited)        (unaudited)   30.11.17  
                                                                                                                     (audited)                                         (audited)                                         (audited) 
 Income from investments held at fair value through profit or loss         3              5,485              4,335       8,216                  –                  –           –              5,485              4,335       8,216 
 Net income from contracts for difference                                  3                228                254         370                  –                  –           –                228                254         370 
 Other income                                                              3                  1                 13          15                  –                  –           –                  1                 13          15 
                                                                                       --------           --------    --------           --------           --------    --------           --------           --------    -------- 
 Total revenue                                                                            5,714              4,602       8,601                  –                  –           –              5,714              4,602       8,601 
                                                                                       --------           --------    --------           --------           --------    --------           --------           --------    -------- 
 Net profit on investments held at fair value through profit or loss                          –                  –           –             38,542             76,456      88,130             38,542             76,456      88,130 
 Net profit/(loss) on foreign exchange                                                        –                  –           –                 42               (40)        (70)                 42               (40)        (70) 
 Net profit from contracts for difference and futures                                         –                  –           –              6,756              9,887      12,535              6,756              9,887      12,535 
                                                                                       --------           --------    --------           --------           --------    --------           --------           --------    -------- 
 Total                                                                                    5,714              4,602       8,601             45,340             86,303     100,595             51,054             90,905     109,196 
                                                                                       --------           --------    --------           --------           --------    --------           --------           --------    -------- 
 Expenses                                                                                                                                                                                                                          
 Investment management and performance fees                                4              (229)              (377)       (661)            (4,812)            (5,718)     (6,641)            (5,041)            (6,095)     (7,302) 
 Other operating expenses                                                  5              (261)              (236)       (525)                (8)                (8)        (16)              (269)              (244)       (541) 
                                                                                       --------           --------    --------           --------           --------    --------           --------           --------    -------- 
 Total operating expenses                                                                 (490)              (613)     (1,186)            (4,820)            (5,726)     (6,657)            (5,310)            (6,339)     (7,843) 
                                                                                       --------           --------    --------           --------           --------    --------           --------           --------    -------- 
 Net profit on ordinary activities before finance costs and taxation                      5,224              3,989       7,415             40,520             80,577      93,938             45,744             84,566     101,353 
 Finance costs                                                                                –                  –         (1)                (1)                (1)         (2)                (1)                (1)         (3) 
                                                                                       --------           --------    --------           --------           --------    --------           --------           --------    -------- 
 Net profit on ordinary activities before taxation                                        5,224              3,989       7,414             40,519             80,576      93,936             45,743             84,565     101,350 
 Taxation                                                                                  (10)               (12)        (18)                  –                  –           –               (10)               (12)        (18) 
                                                                                       --------           --------    --------           --------           --------    --------           --------           --------    -------- 
 Profit for the period                                                     7              5,214              3,977       7,396             40,519             80,576      93,936             45,733             84,553     101,332 
                                                                                       --------           --------    --------           --------           --------    --------           --------           --------    -------- 
 Earnings per ordinary share (pence)                                       7               7.13               5.44       10.11              55.41             110.18      128.45              62.54             115.62      138.56 
                                                                                       ========           ========    ========           ========           ========    ========           ========           ========    ======== 

The total column of this statement represents the Company’s Statement of
Comprehensive Income, prepared in accordance with International Financial
Reporting Standards (IFRS), as 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 discontinued during the period. All income is attributable to the equity
holders of the Company.

The Company does not have any other comprehensive income. The net profit for
the period disclosed above represents the Company’s total comprehensive
income.

STATEMENT OF CHANGES IN EQUITY FOR THE SIX MONTHS ENDED 31 MAY 2018
 

                                                            Called      Share       Capital    Special     Capital    Revenue      Total  
                                                                up    premium    redemption    reserve    reserves    reserve       £’000 
                                                             share    account       reserve       £’000       £’000      £’000            
                                                           capital       £’000         £’000                                              
                                                              £’000                                                                       
 For the six months ended 31 May 2018 (unaudited)                                                                                         
 At 30 November 2017                                          4,026     21,049        11,905     35,272     312,947     11,647    396,846 
 Total comprehensive income:                                                                                                              
 Net profit for the period                                        –          –             –          –      40,519      5,214     45,733 
 Transactions with owners, recorded directly to equity:                                                                                   
 Dividends paid ((a))                                             –          –             –          –           –    (5,119)    (5,119) 
                                                           --------   --------      --------   --------    --------   --------   -------- 
 At 31 May 2018                                               4,026     21,049        11,905     35,272     353,466     11,742    437,460 
                                                           --------   --------      --------   --------    --------   --------   -------- 
 For the six months ended 31 May 2017 (unaudited)                                                                                         
 At 30 November 2016                                          4,026     21,049        11,905     35,272     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 ((b))                                             –          –             –          –           –    (4,571)    (4,571) 
                                                           --------   --------      --------   --------    --------   --------   -------- 
 At 31 May 2017                                               4,026     21,049        11,905     35,272     299,587      9,690    381,529 
                                                           --------   --------      --------   --------    --------   --------   -------- 
 For the year ended 30 November 2017 (audited)                                                                                            
 At 30 November 2016                                          4,026     21,049        11,905     35,272     219,011     10,284    301,547 
 Total comprehensive income:                                                                                                              
 Net profit for the year                                          –          –             –          –      93,936      7,396    101,332 
 Transactions with owners, recorded directly to equity:                                                                                   
 Dividends paid ((c))                                             –          –             –          –           –    (6,033)    (6,033) 
                                                           --------   --------      --------   --------    --------   --------   -------- 
 At 30 November 2017                                          4,026     21,049        11,905     35,272     312,947     11,647    396,846 
                                                              =====      =====         =====      =====      ======      =====     ====== 

(a)   Final dividend of 7.00p per share for the year ended 30 November 2017,
declared on 9 February 2018 and paid on 29 March 2018.
(b)   Final dividend of 6.25p per share for the year ended 30 November 2016,
declared on 6 February 2017 and paid on 29 March 2017.
(c)   Final dividend of 6.25p per share for the year ended 30 November 2016,
declared on 6 February 2017 and paid on 29 March 2017 and interim dividend of
2.00p per share for the year ended 30 November 2017, declared on 24 July 2017
and paid on 23 August 2017.

The transaction costs relating to the acquisition and disposal of investments
amounted to £453,000 and £98,000 respectively for the six months ended 31
May 2018 (six months ended 31 May 2017: £337,000 and £91,000; year ended 30
November 2017: £732,000 and £164,000) and are included within the capital
reserves.

STATEMENT OF FINANCIAL POSITION AS AT 31 MAY 2018
 

                                                                              Notes  31 May 2018   31 May 2017   30 November 2017  
                                                                                           £’000         £’000              £’000  
                                                                                      (unaudited)   (unaudited)          (audited) 
 Non current assets                                                                                                                
 Investments held at fair value through profit or loss                            9       431,684       374,659            390,326 
                                                                                         --------      --------           -------- 
 Current assets                                                                                                                    
 Other receivables                                                                          3,149         7,158              1,703 
 Derivative financial assets held at fair value through profit or loss                      4,554         3,213                189 
 Cash collateral held with brokers                                                            450           414              1,117 
 Cash and cash equivalents                                                                 10,500         8,452             13,048 
                                                                                         --------      --------           -------- 
                                                                                           18,653        19,237             16,057 
                                                                                         --------      --------           -------- 
 Total assets                                                                             450,337       393,896            406,383 
                                                                                         --------      --------           -------- 
 Current liabilities                                                                                                               
 Other payables                                                                           (9,919)       (7,887)            (7,375) 
 Derivative financial liabilities held at fair value through profit or loss                  (38)       (2,038)              (882) 
 Cash collateral received in respect of contracts for difference                          (2,920)       (2,442)            (1,280) 
                                                                                         --------      --------           -------- 
                                                                                         (12,877)      (12,367)            (9,537) 
                                                                                         --------      --------           -------- 
 Net assets                                                                               437,460       381,529            396,846 
                                                                                           ======        ======             ====== 
 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                                                                         353,466       299,587            312,947 
 Revenue reserve                                                                           11,742         9,690             11,647 
                                                                                         --------      --------           -------- 
 Total equity                                                                     7       437,460       381,529            396,846 
                                                                                           ======        ======             ====== 
 Net asset value per ordinary share (pence)                                       7        598.19        521.71             542.66 
                                                                                           ======        ======             ====== 

CASH FLOW STATEMENT FOR THE SIX MONTHS ENDED 31 MAY 2018

                                                                                                                Six months     Six months                Year  
                                                                                                                     ended          ended               ended  
                                                                                                               31 May 2018    31 May 2017    30 November 2017  
                                                                                                                     £’000          £’000               £’000  
                                                                                                                (unaudited)    (unaudited)           (audited) 
 Operating activities                                                                                                                                          
 Net profit on ordinary activities before taxation                                                                   45,743         84,565             101,350 
 Add back finance costs                                                                                                   1              1                   3 
 Net profit on investments and CFDs held at fair value through profit or loss (including transaction costs)        (45,536)       (86,514)           (101,032) 
 Net (gain)/loss on foreign exchange                                                                                   (42)             40                  70 
 Sales of investments held at fair value through profit or loss                                                     122,762         91,950             171,534 
 Purchases of investments held at fair value through profit or loss                                               (125,579)       (93,081)           (176,658) 
 Realised gains on closure of CFDs                                                                                   26,160         22,396              43,446 
 Realised losses on closure of CFDs                                                                                (24,359)       (11,393)            (27,449) 
 Realised losses on closure of futures contracts                                                                       (15)          (205)               (487) 
 Net movement in cash collateral received/(pledged) in respect of CFDs                                                2,307            757             (1,108) 
 Increase in other receivables                                                                                      (2,388)        (1,376)               (242) 
 (Decrease)/increase in other payables                                                                                 (14)          4,499               5,058 
 Decrease/(increase) in amounts due from brokers                                                                        942        (4,436)               (115) 
 Increase/(decrease) in amounts due to brokers                                                                        2,558            364               (707) 
                                                                                                                   --------       --------            -------- 
 Net cash inflow from operating activities before interest and taxation                                               2,540          7,567              13,663 
                                                                                                                   --------       --------            -------- 
 Taxation on investment income included within gross income                                                            (10)           (12)                (18) 
                                                                                                                   --------       --------            -------- 
 Net cash inflow from operating activities                                                                            2,530          7,555              13,645 
                                                                                                                   --------       --------            -------- 
 Financing activities                                                                                                                                          
 Interest paid                                                                                                          (1)            (1)                 (3) 
 Dividends paid                                                                                                     (5,119)        (4,571)             (6,033) 
                                                                                                                   --------       --------            -------- 
 Net cash outflow from financing activities                                                                         (5,120)        (4,572)             (6,036) 
                                                                                                                   --------       --------            -------- 
 (Decrease)/increase in cash and cash equivalents                                                                   (2,590)          2,983               7,609 
 Effect of foreign exchange rate changes                                                                                 42           (40)                (70) 
                                                                                                                   --------       --------            -------- 
 Change in cash and cash equivalents                                                                                (2,548)          2,943               7,539 
 Cash and cash equivalents at start of period                                                                        13,048          5,509               5,509 
                                                                                                                   --------       --------            -------- 
 Cash and cash equivalents at end of the period                                                                      10,500          8,452              13,048 
                                                                                                                   --------       --------            -------- 
 Comprised of:                                                                                                                                                 
 Cash at bank                                                                                                         1,290             82                  44 
 BlackRock’s Institutional Cash Series plc – Sterling Liquidity Fund                                                  9,210          8,370              13,004 
                                                                                                                   --------       --------            -------- 
                                                                                                                     10,500          8,452              13,048 
                                                                                                                      =====          =====               ===== 

NOTES TO THE CONDENSED FINANCIAL STATEMENTS FOR THE SIX MONTHS ENDED 31 MAY
2018

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 condensed 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 2017 (which were prepared
in accordance with International Financial Reporting Standards (IFRS) as
adopted by the European Union (EU) and as applied in accordance with the
provisions of the Companies Act 2016) and 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), issued in November 2014 and updated in January 2017 is
compatible with IFRS, the condensed financial statements have been prepared in
accordance with the guidance set out in the SORP.

3. INCOME

                                          Six months     Six months                Year  
                                               ended          ended               ended  
                                         31 May 2018    31 May 2017    30 November 2017  
                                               £’000          £’000               £’000  
                                          (unaudited)    (unaudited)           (audited) 
 Investment income:                                                                      
 UK listed dividends                            3,471          2,984               5,866 
 UK listed special dividends                    1,068            326                 441 
 UK listed stock dividends                         40             17                  58 
 UK listed REIT dividends                         249              –                 482 
 Overseas listed dividends                        553            831               1,192 
 Overseas listed special dividends                 62            177                 177 
 Overseas listed stock dividends                   42              –                   – 
 Income from contracts for difference             228            254                 370 
                                             --------       --------            -------- 
                                                5,713          4,589               8,586 
                                             --------       --------            -------- 
 Other income:                                                                           
 Deposit interest                                   1              –                   2 
 Underwriting commission                            –             13                  13 
                                             --------       --------            -------- 
                                                    1             13                  15 
                                             --------       --------            -------- 
 Total income                                   5,714          4,602               8,601 
                                                =====          =====               ===== 

Dividends and interest received in cash in the six months ended 31 May 2018
amounted to £4,289,000 and £1,000 (six months ended 31 May 2017: £3,233,000
and £nil; year ended 30 November 2017: £8,344,000 and £2,000) respectively.

There are no special dividends recognised in capital in the six months ended
31 May 2018 (six months ended 31 May 2017: £nil; year ended 30 November 2017:
£8,000).

4. INVESTMENT MANAGEMENT AND PERFORMANCE FEES

                                   Six months ended                 Six months ended                    Year ended             
                                      31 May 2018                      31 May 2017                   30 November 2017          
                                      (unaudited)                      (unaudited)                       (audited)             
                              Revenue    Capital      Total    Revenue    Capital      Total    Revenue    Capital      Total  
                                 £’000      £’000      £’000      £’000      £’000      £’000      £’000      £’000      £’000 
 Investment management fee         229        686        915        377      1,131      1,508        661      1,982      2,643 
 Performance fee                     –      4,126      4,126          –      4,587      4,587          –      4,659      4,659 
                              --------   --------   --------   --------   --------   --------   --------   --------   -------- 
 Total                             229      4,812      5,041        377      5,718      6,095        661      6,641      7,302 
                                 =====      =====      =====      =====      =====      =====      =====      =====      ===== 

With effect from 1 December 2017 the performance fee changed from 10% to 15%
of Net Asset Value total return outperformance of the benchmark measured over
a two year rolling basis and will be applied on the average gross assets over
two years. The previous cap on the performance fee of 1% of average gross
assets over a one year period has been replaced with a cap on total management
and performance fees of 1.25% of average gross assets over a two year period
which has the effect of capping performance fees at circa 0.9% of average
gross assets over two years.

With effect from 22 March 2018, the Company’s benchmark index was changed
from the Numis Smaller Companies excluding AIM (excluding Investment
Companies) Index to the Numis Smaller Companies plus AIM (excluding Investment
Companies) Index. For the purposes of calculation of performance fee for the
six months period ended 31 May 2018, the outperformance of the Net Asset Value
total return has been measured against the performance of the benchmark
indices on a blended basis during this period.

Performance fees have been wholly allocated to the capital column of the
Statement of Comprehensive Income as the performance has been predominantly
generated through capital returns from the investment portfolio. For the six
months ended 31 May 2018, a performance fee of £4,126,000 has been accrued
(six months ended 31 May 2017: £4,587,000; year ended 30 November 2017:
£4,659,000).

Investment management fees changed with effect from 1 August 2017 from 0.70%
per annum to 0.35% per annum on month end gross assets. The management fee is
charged 25% to revenue and 75% to capital.

5. OTHER OPERATING EXPENSES

                                  Six months     Six months                Year  
                                       ended          ended               ended  
                                 31 May 2018    31 May 2017    30 November 2017  
                                       £’000          £’000               £’000  
                                  (unaudited)    (unaudited)           (audited) 
 Allocated to revenue:                                                           
 Custody fee                                5              3                   8 
 Auditor’s remuneration:                                                         
 – audit services                          16             18                  37 
 – other assurance services                 6              6                   6 
 Registrar’s fee                           19             14                  33 
 Directors’ emoluments                     68             87                 167 
 Broker fees                               18             19                  37 
 Depositary fees                           28             23                  49 
 Marketing fees                            35              9                  54 
 Other administrative costs                66             57                 134 
                                     --------       --------            -------- 
                                          261            236                 525 
                                     --------       --------            -------- 
 Allocated to capital:                                                           
 Custody transaction charges                8              8                  16 
                                     --------       --------            -------- 
                                          269            244                 541 
                                        =====          =====               ===== 

6. DIVIDENDS
The Board has declared an interim dividend of 2.50p per share payable on 29
August 2018 to shareholders on the register at 3 August 2018 (six months ended
31 May 2017, interim dividend of 2.00p per share paid on 23 August 2017 to
shareholders on the register at 4 August 2017). This dividend has not been
accrued in the financial statements for the six months ended 31 May 2018 as,
under IFRS, interim dividends are not recognised until paid. Dividends are
debited directly to revenue reserve.

7. EARNINGS AND NET ASSET VALUE PER ORDINARY SHARE
Total revenue and capital returns per share 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 May 2018     31 May 2017    30 November 2017  
                                                                                                                                                   (unaudited)     (unaudited)           (audited) 
 Net revenue profit attributable to ordinary shareholders (£’000)                                                                                        5,214           3,977               7,396 
 Net capital profit attributable to ordinary shareholders (£’000)                                                                                       40,519          80,576              93,936 
                                                                                                                                                      --------        --------            -------- 
 Total profit attributable to ordinary shareholders (£’000)                                                                                             45,733          84,553             101,332 
                                                                                                                                                      --------        --------            -------- 
 Equity shareholders’ funds (£’000)                                                                                                                    437,460         381,529             396,846 
                                                                                                                                               ---------------  --------------      -------------- 
 The weighted average number of ordinary shares in issue during the 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 share (pence)                                                                                                                       7.13            5.44               10.11 
 Capital earnings per share (pence)                                                                                                                      55.41          110.18              128.45 
                                                                                                                                                      --------        --------            -------- 
 Total earnings per share (pence)                                                                                                                        62.54          115.62              138.56 
                                                                                                                                                        ======           =====               ===== 

   

                                                     As at          As at               As at  
                                               31 May 2018    31 May 2017    30 November 2017  
                                                (unaudited)    (unaudited)           (audited) 
 Net asset value per ordinary share (pence)          598.19         521.71              542.66 
                                                   --------       --------            -------- 
 Ordinary share price (pence)                        538.00         436.00              457.50 
                                                     ======         ======              ====== 

The Company does not have any dilutive securities.

8. CALLED UP SHARE CAPITAL

                                                                       Ordinary       Treasury           Total    Nominal  
                                                                shares in issue         shares          shares      value  
                                                                        (number)       (number)        (number)      £’000 
 Allotted, called up and fully paid share capital comprised:                                                               
 Ordinary shares of 5p each:                                                                                               
                                                                  --------------  -------------  --------------   -------- 
 At 1 December 2017 and 31 May 2018                                   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 and cash
equivalents 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(g) as set out on pages 51 and 52 in the Company’s Annual Report and
Financial Statements for the year ended 30 November 2017.

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 an identical instrument in an active
market
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. The Company does not adjust the quoted price for these
instruments.

Level 2 – Valuation techniques using observable inputs
This category includes instruments valued using quoted prices for similar
instruments in markets that are considered less than active; or other
valuation techniques where all significant inputs are directly or indirectly
observable from market data. 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 and relying as little as possible on entity specific inputs.

As at the period end the CFDs were valued using the underlying equity bid/ask
price and the contract price at the inception of the CFD trade or at the trade
reset date. There have been no changes to the valuation technique since the
previous year or as at the date of this report.

Level 3 – Valuation techniques using significant unobservable inputs
This category includes all instruments where the valuation technique includes
inputs not based on observable market data and these 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 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. The determination of what constitutes ‘observable’ inputs
requires significant judgement by the Investment Manager.

There has been no change to the valuation techniques during the period under
review or as at the date of this report.

Contracts for difference have 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. Index futures have also been classified as Level 2 investments.

The table below sets out fair value measurements using IFRS 13 fair value
hierarchy.

 Financial assets/(liabilities) at fair value through profit or loss as at     Level 1    Level 2    Level 3      Total  
 31 May 2018 (unaudited)                                                          £’000      £’000      £’000      £’000 
 Assets:                                                                                                                 
 Equity investments                                                             431,684          –          –    431,684 
 Contracts for difference (gross exposure on long positions)                          –     78,645          –     78,645 
 Liabilities:                                                                                                            
 Contracts for difference (gross exposure on short positions)                         –   (43,851)          –   (43,851) 
                                                                               --------   --------   --------   -------- 
                                                                                431,684     34,794          –    466,478 
                                                                                 ======     ======     ======     ====== 

   

 Financial assets/(liabilities) at fair value through profit or loss as at     Level 1    Level 2    Level 3      Total  
 31 May 2017 (unaudited)                                                          £’000      £’000      £’000      £’000 
 Assets:                                                                                                                 
 Equity investments                                                             374,659          –          –    374,659 
 Contracts for difference (gross exposure on long positions)                          –     74,865          –     74,865 
 Liabilities:                                                                                                            
 Contracts for difference (gross exposure on short positions)                         –   (23,250)          –   (23,250) 
 Index futures (gross exposure on short positions)                                    –    (3,663)          –    (3,663) 
                                                                               --------   --------   --------   -------- 
                                                                                374,659     47,952          –    422,611 
                                                                                 ======     ======     ======     ====== 

   

 Financial assets/(liabilities) at fair value through profit or loss as at     Level 1    Level 2    Level 3      Total  
 30 November 2017 (audited)                                                       £’000      £’000      £’000      £’000 
 Assets:                                                                                                                 
 Equity investments                                                             390,326          –          –    390,326 
 Contracts for difference – (gross exposure on long positions)                        –     74,071          –     74,071 
 Liabilities:                                                                                                            
 Contracts for difference (gross exposure on short positions)                         –   (25,020)          –   (25,020) 
 Index futures (gross exposure on short positions)                                    –    (9,622)          –    (9,622) 
                                                                               --------   --------   --------   -------- 
                                                                                390,326     39,429          –    429,755 
                                                                                 ======     ======     ======     ====== 

There were no transfers between levels for financial assets and financial
liabilities during the period recorded at fair value as at 31 May 2018, 31 May
2017 and 30 November 2017. The Company did not hold any Level 3 securities
throughout the financial period under review or as at 31 May 2018, 31 May 2017
or 30 November 2017.

10. TRANSACTIONS WITH THE AIFM AND INVESTMENT MANAGER
BlackRock Fund Managers Limited (BFM) provides management and administration
services to the Company under a contract which is terminable on six month’s
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)).

The investment management fee due for the six months ended 31 May 2018
amounted to £915,000 (six months ended 31 May 2017: £1,508,000; year ended
30 November 2017: £2,643,000). In addition the performance fee of £4,126,000
(six months ended 31 May 2017: £4,587,000, year ended 30 November 2017:
£4,659,000) was accrued for the six months ended 31 May 2018.

At the period end £915,000 was outstanding in respect of management fees (31
May 2017: £1,508,000; 30 November 2017: £1,942,000) and £4,126,000 was
accrued in respect of performance fees (31 May 2017: £4,587,000; 30 November
2017: £4,659,000). Any final performance fee for the full year ending 30
November 2018 will not crystallise and fall due until the calculation date of
30 November 2018.

In addition to the above services, BlackRock provides the Company with
marketing services. The total fees paid or payable for these services to 31
May 2018 amounted to £35,000 excluding VAT (six months ended 31 May 2017:
£9,000; year ended 30 November 2017: £54,000). Marketing fees of £117,000
excluding VAT (31 May 2017: £37,000; 30 November 2017: £92,000) were
outstanding at 31 May 2018.

The Company has an investment in BlackRock’s Institutional Cash Series plc
– Sterling Liquidity Fund of £9,210,000 as at 31 May 2018 (31 May 2017:
£8,370,000; 30 November 2017: £13,004,000).

11. RELATED PARTY DISCLOSURE: DIRECTORS’ EMOLUMENTS
The Board consists of five non-executive Directors, all of whom are considered
to be independent by the Board. None of the Directors has a service contract
with the Company. The Chairman receives an annual fee of £36,000, the
Chairman of the Audit Committee receives an annual fee of £28,000 and each
other Director receives an annual fee of £24,000.

As at 31 May 2018 an amount of £11,000 (31 May 2017: £13,000; 30 November
2017: £11,000) was outstanding in respect of Directors’ fees.

At the period end and at 25 July 2018, the interests of the Directors in the
ordinary shares of the Company were as follows:

                                 Ordinary shares 31 May 2018  Ordinary shares 25 July 2018 
 Christopher Samuel (Chairman)                        11,000                        11,000 
 Loudon Greenlees                                     15,000                        15,000 
 Simon Beart                                    47,677 ((1))                  48,199 ((2)) 
 Jean Matterson                                       46,000                        46,000 
 Andrew Pegge                                          2,000                         2,000 

1.    Including 16,129 shares held by Mrs Beart.
2.    Including 16,390 shares held by Mrs Beart.

12. CONTINGENT LIABILITIES
There were no contingent liabilities as at 31 May 2018 (31 May 2017 and 30
November 2017: nil).

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 31 May 2018 and
31 May 2017 has not been audited.

The information for the year ended 30 November 2017 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 financial
statements contained no qualification or statement under sections 498(2) or
498(3) of the Companies Act 2006.

14. ANNUAL RESULTS
The Board expects to announce the annual results for the year ending 30
November 2018 in February 2019. 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 February 2019, with the Annual General Meeting expected to be
held in March 2019.

------------------------------------------------------------------------------------------------------------------------------------------------------

INDEPENDENT REVIEW REPORT TO BLACKROCK THROGMORTON TRUST PLC
 

INTRODUCTION
We have been engaged by the Company to review the condensed set of financial
statements in the half-yearly financial report for the six months ended 31 May
2018 which comprises the Statement of Comprehensive Income, Statement of
Changes in Equity, Statement of Financial Position, Cash Flow Statement and
the related notes 1 to 14. We have read the other information contained in the
half-yearly financial report and considered whether it contains any apparent
misstatements or material inconsistencies with the information in the
condensed set of financial statements.

This report is made solely to the Company in accordance with guidance
contained in International Standard on Review Engagements (UK and Ireland)
2410 “Review of Interim Financial Information Performed by the Independent
Auditor of the Entity” issued by the Auditing Practices Board. To the
fullest extent permitted by law, we do not accept or assume responsibility to
anyone other than the Company, for our work, for this report, or for the
conclusions we have formed.

DIRECTORS’ RESPONSIBILITIES
The half-yearly financial report is the responsibility of, and has been
approved by, the Directors. The Directors are responsible for preparing the
half-yearly financial report in accordance with the Disclosure Guidance and
Transparency Rules of the United Kingdom’s Financial Conduct Authority.

As disclosed in note 2, the annual financial statements of the Company are
prepared in accordance with IFRSs as adopted by the European Union. The
condensed set of financial statements included in this half-yearly financial
report has been prepared in accordance with International Accounting Standard
34, “Interim Financial Reporting”, as adopted by the European Union.

OUR RESPONSIBILITY
Our responsibility is to express to the Company a conclusion on the condensed
set of financial statements in the half-yearly financial report based on our
review.

SCOPE OF REVIEW
We conducted our review in accordance with International Standard on Review
Engagements (UK and Ireland) 2410, “Review of Interim Financial Information
Performed by the Independent Auditor of the Entity” issued by the Auditing
Practices Board for use in the United Kingdom. A review of interim financial
information consists of making enquiries, primarily of persons responsible for
financial and accounting matters, and applying analytical and other review
procedures. A review is substantially less in scope than an audit conducted in
accordance with International Standards on Auditing (UK) and consequently does
not enable us to obtain assurance that we would become aware of all
significant matters that might be identified in an audit. Accordingly, we do
not express an audit opinion.

CONCLUSION
Based on our review, nothing has come to our attention that causes us to
believe that the condensed set of financial statements in the half-yearly
financial report for the six months ended 31 May 2018 is not prepared, in all
material respects, in accordance with International Accounting Standard 34 as
adopted by the European Union and the Disclosure Guidance and Transparency
Rules of the United Kingdom’s Financial Conduct Authority.

Ernst & Young LLP
London
25 July 2018

------------------------------------------------------------------------------------------------------------------------------------------------------
 

For further information, please contact:

Simon White, Managing Director, Investment Companies, BlackRock Investment
Management (UK) Limited
Tel: 020 7743 3000

Press enquiries:

Lucy Horne, Lansons Communications – Tel:  020 7294 3689
E-mail:  lucyh@lansons.com

26 July 2018

12 Throgmorton Avenue
London EC2N 2DL

END

The Half Yearly Financial Report will also be available on the BlackRock
website at http://www.blackrock.co.uk/thrg.  Neither the contents of the
Manager’s website nor the contents of any website accessible from hyperlinks
on the Manager’s website (or any other website) is incorporated into, or
forms part of, this announcement.



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