REG-BlackRock Throg Tst: Half-year Report
20/07/2022 15:15
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 31 MAY 2022
31 May 2022 (unaudited) 30 November 2021 (audited)
Net assets (£’000) (1) 690,173 935,148
Net asset value per ordinary share (pence) 672.58 921.91
Ordinary share price (mid-market) (pence) 635.00 935.00
Benchmark Index (2) 17,182.07 18,968.77
(Discount)/premium to cum income net asset value (3) (5.6)% 1.4%
Average (discount)/premium to cum income net asset value for the period/year (3) (1.8)% 1.2%
--------------- ---------------
Performance (with dividends reinvested)
Net asset value per share (3) -26.3% +37.0%
Ordinary share price (3) -31.4% +38.8%
Benchmark Index (2) -9.4% +24.5%
======== ========
For the six months ended 31 May 2022 (unaudited) For the six months ended 31 May 2021 (unaudited) Change %
Revenue
Net revenue profit on ordinary activities after taxation (£’000) 6,303 4,749 +32.7
Revenue return per ordinary share (pence) (4) 6.12 5.24 +16.8
Dividends per ordinary share (pence)
Interim 2.60 2.50 +4.0
1. The change in net assets reflects market movements, share issues, the
purchase of the Company’s own shares and dividends paid during the period.
2. The Company’s Benchmark Index is the Numis Smaller Companies plus AIM
(excluding Investment Companies) Index. 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 Index. From 1 December 2013 to
21 March 2018, the Company’s Benchmark Index was the Numis Smaller Companies
excluding AIM (excluding Investment Companies) Index. Prior to 1 December
2013, the Company’s Benchmark Index was the Numis Smaller Companies plus AIM
(excluding Investment Companies) Index. The performance of the Benchmark
Indices during these periods has been blended to reflect these changes.
3. Alternative Performance Measures, see Glossary contained within the Half
Yearly Financial Report.
4. Further details are given in the Glossary contained within the Half Yearly
Financial Report.
CHAIRMAN'S STATEMENT
Dear Shareholder
Period highlights
* NAV per ordinary share decreased by 26.3%, versus the Benchmark Index
decrease of 9.4%
* Share price decreased by 31.4%
* Earnings per share increased by 16.8%
* Interim dividend declared of 2.60p per share (2021: 2.50p)
* 1,773,900 new ordinary shares were issued and 594,670 ordinary shares were
repurchased into treasury for a total consideration of £16,551,000 and
£3,498,000 respectively
(All returns are in sterling terms with dividends reinvested.)
OVERVIEW
The Board recognises that this has been a difficult period for both
shareholders and the Company with the underperformance of our benchmark at the
NAV level exacerbated by a widening discount. The past six months have been
particularly challenging to navigate for the Company, with our Manager’s
growth style firmly out of favour as investors rushed from strongly performing
growth companies into energy stocks, lower growth value and defensives. I
would like to assure shareholders that although the half-year results have
been disappointing, both the Board and our Manager remain focused on achieving
the Company’s objectives of providing shareholders with long-term capital
growth and an attractive total return.
The period under review was dominated by significant geo-political instability
and heightened market volatility as a result of the ongoing war in Ukraine and
the devastating humanitarian crisis that has followed. The resulting energy
supply shock, driven by concerns around energy and commodity scarcity, has
seen energy and food prices soar, driving UK inflation to a 40 year high of
9.4% in June 2022.
The outlook for the UK economy has deteriorated as powerful inflationary
drivers acted to exacerbate residual COVID-19 related supply chain disruption.
The invasion was also the catalyst for a further market rotation from growth
to value stocks which saw many of our portfolio holdings de-rate, seemingly
indiscriminately, and with, in many cases, no material change in the
investment thesis or outlook. This was primarily led by the strong performance
of energy stocks and a rotation away from more highly rated, fast growing,
companies whose previous strong share price performance provided easy profit
taking.
As is often the case at any time of significant macroeconomic uncertainty, the
Company’s investment universe of small and medium-sized companies has been
disproportionately impacted, with UK Small & Mid-Cap stocks underperforming UK
Large Caps by the largest amount for more than 20 years. To provide some
context, the FTSE 100 is dominated by several large Oil & Gas companies which
rallied strongly as the price of energy related commodities rose sharply. The
Large Cap index is also less domestically focused, deriving a significant
proportion of its revenues from overseas. These factors contributed to the
relative under performance of the UK Mid-Cap indices to which our portfolio is
heavily exposed.
This market turmoil has left central banks with the unenviable task of
navigating a fine line between intervening to address soaring inflation, while
seeking to avoid derailing an already fragile economic recovery. In May of
this year the Bank of England raised the base interest rate by 0.25 percentage
points to 1%, with a further rise of 0.25 percentage points announced in June.
Central bank rhetoric around the potential for further rate hikes later this
year, coupled with other policy tightening measures, has led some to forecast
that inflation will peak in the second half of the year. What is clear is that
the rapidly rising cost of living is likely to result in lower consumer
spending and higher operational costs for UK companies as the costs of raw
materials, logistics and wages apply pressure to corporate profit margins.
Against this challenging economic backdrop, our portfolio manager remains
optimistic about the longer term prospects for the companies within our
portfolio, and for the asset class more broadly given the historic longer-term
outperformance of UK smaller companies over their larger counterparts. In
addition, he believes that the market is presently expressing an overly
pessimistic view of the outlook for the asset class, as reflected in current
UK Small and Mid-Cap valuations. Whilst the market remains concerned over the
sensitivity of UK listed companies to a weakening domestic economic outlook,
it is important to note that for many of the Company’s portfolio investments
our portfolio manager considers that trading remains strong and their future
growth prospects very compelling.
As you will read in Dan Whitestone’s report which follows, our portfolio is
constructed of differentiated and innovative companies, those with strong
balance sheets that can provide financial resilience and the option to deploy
capital to take advantage of the opportunities the market volatility will
inevitably create. Our portfolio manager has selected what he believes are
those UK smaller companies with superior business models and competitive
advantage, and which are best-placed to, over time, prosper as those
competitors less able to adapt to rising operating costs and increased debt
burdens flounder.
PERFORMANCE
Over the six months to 31 May 2022, the Company’s Net Asset Value (NAV)
return was -26.3% compared to a return of -9.4% from the Company’s Benchmark
Index, an underperformance of 16.9%. The Company’s share price decreased by
31.4%, underperforming the Benchmark Index by 22.0%, which resulted in the
Company’s share price ending the period on a discount to NAV of 5.6% (30
November 2021: a premium of 1.4%). Since the period end and up to the close of
business on 18 July 2022, the Company’s NAV has fallen by 9.6%, and the
Benchmark Index has fallen by 9.1% (all figures with dividends reinvested).
Performance record to 31 May 2022 (with dividends reinvested)
NAV per share Share price Benchmark Index
1 Year change % -22.9 -27.8 -11.7
3 Year change % 22.2 24.5 20.8
5 Year change % 39.3 57.8 17.6
This short-term performance should of course be viewed in the context of the
strong, long-term, performance delivered over many years. Over the five-year
period to 31 May 2022, the Company’s NAV returned 39.3% and the share price
returned 57.8%, versus the benchmark index return of 17.6% over the same
period.
Further information on the Company’s performance and 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
which follows.
REVENUE RETURN AND DIVIDENDS
The revenue return per share for the period amounted to 6.12 pence per share,
compared to 5.24 pence per share earned during the same six-month period last
year. This represents an increase of 16.8%. It is positive to see that despite
the broader market turmoil the income generated through our investment
portfolio has increased year-on-year.
The Board recognises that, although the Company’s objective is capital
growth, shareholders value consistency of dividends paid by the Company; an
interim dividend of 2.60p per share (2021: 2.50p per share) has therefore been
declared, payable on 26 August 2022 to shareholders on the register on 29 July
2022 (the ex-dividend date is 28 July 2022). The interim dividend is fully
covered by revenue generated by the portfolio during the period.
BOARD COMPOSITION AND DIVERSITY
I am pleased to report that the Board is in compliance with the recently
published recommendations of the BEIS-sponsored FTSE Women Leaders Review. The
review sets new targets for FTSE 350 companies which are designed to achieve
boards with 40% female representation (previously 33%) and at least one woman
in the role of Chair or Senior Independent Director on the board by the end of
2025.
It is encouraging to note that the Company meets both of these requirements
already. The Board has been 50% female since 2019 and in 2020, Mrs Nash was
appointed Senior Independent Director. During the period under review, Mrs
Nash accompanied the Chairman at several meetings with our major shareholders,
seeking feedback on the Company and its activities, and also discussed
developing corporate governance and best practice.
The Board has considered the recommendation of the Parker Review which is
focused on increasing the ethnic diversity of UK boards. Historically, our
Board has focused on matters of diversity, more broadly considering, amongst
others, a balance of skill sets, gender, age, experience and independence as
well as the selection process itself when determining the Board’s succession
plans. We believe this is demonstrated through the ongoing refreshment of the
Board, an appropriate range of director age and tenure ensuring there is a
suitable balance of experience and corporate memory, as well as regular
infusions of new thinking and alternative approaches.
The Board recognises the benefits of diversity, including that of ethnicity,
and therefore it intends to comply with the Parker Review recommendation that
FTSE 350 companies have at least one director from an ethnically diverse
background by 2024.
In order to achieve compliance with this target, the Board has agreed that it
will incorporate this diversity characteristic into its succession plans and
any search brief and the Board may engage a specialist recruitment firm to
assist it in achieving its Board diversity objectives.
ENVIRONMENTAL, SOCIAL AND GOVERNANCE (ESG) INTEGRATION
The Board recognises that ESG issues can present both opportunities and risks
to long-term investment performance. An assessment of these issues forms an
important part of the decision-making process of the Investment Manager,
though the Company does not exclude investments based solely on ESG criteria.
These considerations also guide BlackRock, the Investment Manager, in its
stewardship of portfolio companies and its assessment of the issues on which
to engage with investee companies, how this is best done and whether or not to
support proposals put to shareholders.
BlackRock incorporates material ESG information and consideration of
sustainability risks into investment decisions in order to seek to enhance
risk-adjusted returns. ESG insights and data, including sustainability risks,
are considered as part of the investment process, including company research
and portfolio construction. These ESG insights are not the sole consideration
when making investment decisions; ESG integration does not change the
Company’s investment objective or policy or constrain the investable
universe. The extent to which ESG insights are considered during investment
decision-making will also be determined by other factors including, for
example, the portfolio company’s sector and operations.
SHARE PREMIUM/DISCOUNT
During the six months to 31 May 2022, the Company’s share price premium/
discount to NAV ranged between a premium of 2.7% and a discount of 14.3%,
ending the period at a discount of 5.6%. This compares very favourably with
the weighted average discount of the UK Smaller Companies peer group which
ended the period at a discount of 13.0%. As at 18 July 2022, the Company’s
shares were trading at a discount of 6.6% versus the peer group discount of
13.1%.
There were two distinct market environments during the period under review.
During the four months to 31 March 2022 we saw demand for the Company’s
shares increase. The Company consequently issued a total of 1,773,900 new
shares for a total consideration of £16.6m. All shares were issued at a
premium to the prevailing NAV and were therefore accretive to existing
shareholders. The issue of new shares has not only prevented an excessive
premium arising but has also benefitted existing shareholders as it increases
the size of the Company and therefore the fixed costs borne by shareholders
are shared over a wider asset base. The issue of new shares can also act to
increase liquidity, helping to moderate any undesirable volatility in our
share rating that may arise.
Russia’s invasion of Ukraine and the associated energy supply shock
witnessed our share rating, and that of the peer group, deteriorate in April
as the UK Smaller Companies sector fell out of favour. The Company’s share
price traded at a discount to NAV and following consultation with the Manager
and the Company’s corporate broker, the Board determined that it was in
shareholders’ interests to seek to buy back shares with the objective of
ensuring that an excessive discount to NAV did not arise.
The Company has not bought back its own shares for many years and, as I have
mentioned in the past, the Board believes that the best way of addressing any
discount over the longer term is to generate good performance and to create
demand for the Company’s shares in the secondary market through broadening
awareness of the Company’s unique structure and other attractions.
In determining whether the premium/discount to NAV at which the Company’s
shares trade is excessive or otherwise, the Board considers several factors.
These may include but are not limited to: whether the share rating is
commensurate with the current demand for UK Smaller Companies and whether the
Company’s shares were trading in normal market conditions; the ongoing
attractiveness of the investment proposition, in particular the strength of
the portfolio management team and process; and the strong long-term
performance delivered for shareholders, both in absolute and relative terms.
During the period the Company bought back a total of 594,670 ordinary shares
for a total consideration of £3.5m to be held in treasury. The advantage of
holding shares in treasury over cancelling them is that they remain listed.
This means that where there is an opportunity to re-issue these shares, the
Company does not have to pay additional fees for admission to trading as would
be required with an issue of new shares. It is the Board’s policy that it
will generally only take shares into treasury where it believes there is a
reasonable likelihood of re-issue in the future. Since 31 May 2022 and up to
the latest practicable date of 18 July 2022, a further 537,757 shares have
been bought back for a total consideration of £3,006,000. All shares were
bought back at a discount to the prevailing NAV and were therefore accretive
to existing shareholders.
Following this share buy back activity the Company’s discount narrowed
substantially from 14.3% to 5.6% at the period end, comparing favourably with
the peer group weighted average discount of 13.0%. The Board believes that
this action has been effective in achieving the Board’s objectives and was
in shareholders’ interests.
As we seek to navigate these more volatile and uncertain markets your Board
will continue to monitor the Company’s share rating and may deploy its
powers to issue or buy back the Company’s shares where it believes that it
is in shareholders’ long-term best interests to do so. As it does each year,
the Board will once again seek to renew the authorities granted by
shareholders to issue or buy back shares at the Company’s AGM.
As I mentioned in my Chairman’s Statement in last year’s annual report,
the size of the Company, and the extent and speed of any further share
issuance, will continue to be kept under close review. There can be no
certainty that share issuance will continue at the same level that it has in
previous years and as a result it is possible that the Company’s shares may
in future trade at a higher premium to NAV than they have in the past.
Conversely, although we have seen fit to buy back shares during the period,
the Board will continue to consider whether such action in the future is in
shareholders’ long-term interests on a case-by-case basis and with the
overarching objective that the Company’s shares should not trade at an
excessive discount to NAV.
SHAREHOLDER COMMUNICATION
We appreciate how important access to regular information is to our
shareholders. To supplement our Company website, we now therefore offer
shareholders the ability to sign up to the Trust Matters newsletter which
includes information on the Company as well as news, views and insights on the
investment trust market. Information on how to sign up is included on the
inside cover of this report.
OUTLOOK
As we move into the second half of the year, the Board shares our portfolio
manager’s view that company specifics and the strong trading reported by
many of the constituents of our portfolio can triumph over the macroeconomic
malaise currently weighing heavily on UK smaller company valuations and that
we will, in time, see a return to the strong and consistent investment
performance delivered to shareholders over many years.
Our portfolio manager’s fundamental philosophy remains unchanged, with a
continued focus on financially strong companies with innovative and disruptive
business models and differentiated offerings which are capable of delivering
sustained growth over time. This approach has served the Company well over
many years and the Board remains fully supportive of our portfolio manager.
CHRISTOPHER SAMUEL
Chairman
20 July 2022
INVESTMENT MANAGER’S REPORT - FOR THE SIX MONTHS ENDED 31 MAY 2022
MARKET REVIEW AND OVERALL INVESTMENT PERFORMANCE
Volatility has been a key feature of equity markets during the first half of
the financial year, with concerns around inflation, monetary tightening, the
humanitarian and geo-political ramifications of Russia’s invasion of Ukraine
and COVID-19 all driving large scale market moves. For the most part, the
strongest sectors have been the energy-related sectors and those deemed most
defensive as investors continue to grapple with the fear of an economic
slowdown. Within the UK equity market, the effect of this can be seen in the
gap between the performance year-to-date of the FTSE 100 (make up is over 50%
in resources, staples and healthcare) and the FTSE 250, which now has the
largest dispersion on record, and we think gives some measure of the extremes
of positioning caused by current events. The period has also been
characterised by a marked stock market rotation from growth to value,
negatively impacting the Company’s positioning as companies with strong
growth prospects and solid financial foundations have retraced in recent
months as investors question the appropriate valuation for long duration
assets in a rising interest rate environment.
PERFORMANCE REVIEW
Performance during the first half of the year has been disappointing, with the
Company’s NAV returning -26.3%, while our Benchmark Index has fallen by
9.4%. This is clearly not where we would wish the portfolio to be at the
half-year stage, and although we acknowledge that shareholders will find this
underperformance disappointing, the Company’s longer-term track record of
absolute and relative performance remains strong. This is not to make an
excuse, only to observe that this is a volatile investment universe but the
gains over the long term can prove very attractive and the philosophy and
process of this Company have delivered returns comfortably in excess of the
Benchmark Index.
Navigating a period where our investment style is out of favour reflecting the
recent rotation away from growth to value shares is always going to be
difficult, but unfortunately, we started 2022 with a large gross and net
exposure. To stress, this was not a direct call on the market, but to reflect
our conviction in our investments following a strong reporting period through
late 2021 and indeed the confidence of the management teams that have guided
their companies through very difficult times such as the Global Financial
Crisis, and the outlook for revenue and profit growth they believe they are
capable of generating. Whilst financial reporting overall has been generally
positive this year many of our shares have de-rated through the period and of
course this effect on the NAV has been magnified by the Company’s gearing.
Furthermore, the Company’s large exposure to Consumer Services, Financials
and Industrials has been a headwind, as has been our underweight exposure to
Resources and Basic Materials.
It is important to draw the distinction between a period of fund
underperformance by a de-rating in profitable growth companies with strong
balance sheets and exciting growth prospects, like your Company has endured,
as opposed to permanent capital loss through a series of negative investment
case developments in speculative cash consumptive loss-making businesses.
Whilst voices may grow louder about the discount rate and “what’s the
right p/e multiple”, it is worth stressing that we see this share price
underperformance very much as a transient period and do not see the falls in
our long positions as reflective of permanent loss of capital. Whilst we
can’t predict the precise timing of this recovery, we firmly believe that
these investments have exciting long-term futures and will capitalise on this
uncertain period which in turn will reward loyal shareholders in the years to
come.
Whilst the economic outlook has undoubtedly become more challenging post
Russia’s invasion of Ukraine, a slowdown looks unavoidable as rising input
costs and supply chain challenges weigh on demand both at the consumer and
corporate level. Our companies have strong financial frameworks where a large
percentage of their market value is in cash which affords protection in a
downturn but also provides capital to fund buy-backs or make acquisitions to
drive faster earnings recovery.
At a stock specific level, many of the largest detractors year-to-date have
been holdings in UK mid-caps which have been aggressively sold off throughout
the period, which we feel has largely happened regardless of their end market
exposure. For example, Watches of Switzerland has been one of the largest
detractors during the year, which we would attribute to ongoing concerns
around the outlook for the consumer despite the supply limitations of the
industry and the robustness of demand. Whilst the outlook for the consumer has
deteriorated, we do not see the “cost of living” crisis as a particularly
acute problem for high-end luxury watches where demand continues to far exceed
supply. Impax Asset Management (Impax) has seen mark-to-market downgrades on
falling equity markets, but Impax continues to see net inflows reflecting the
long-term strength of its franchises and its ability to continue to take
market share. Gamma Communications also delivered two positive updates through
the period, but the shares were weak along with many other UK mid-cap names.
One position worth highlighting is IntegraFin, a UK wealth management platform
for advisers, which did disappoint the market over their guidance for costs.
The major feature of this business should be high levels of recurring (and
growing) revenues and this has indeed been true. However, the company has felt
it necessary to take a step up in operating spend to deliver best in class
service and so margins will need to fall back from the mid 40% range. This
should not really change the fundamental long term investment case but it is a
disappointment given previous statements on cost control; we have reduced the
position accordingly.
There is little value to add from listing several shares which individually
have made a positive contribution to performance given the overall
underperformance of the Company. However, we do feel it is worth noting that
many of our holdings have continued to trade extremely well. WH Smith is one
example which reported strong trading on a rebound in travel volumes notably
in the USA. There were therefore earnings upgrades following its results and
the shares rebounded sharply.
PORTFOLKIO POSITIONING & OUTLOOK
Overall, this has been a very ‘macro’ driven year to date. When looking at
individual company results and looking at the state of company P&L’s and
balance sheets, we are often struck by just how much protection and upside
there is, which is why we have retained our exposure and remain modestly net
long. Acknowledging the heightened levels of uncertainty and recognising that
strong numbers aren’t translating into instant share price recovery in this
market back-drop, we reduced the gross exposure to c.115% and the net to
around 102% (as a percentage of net assets).
A valid market concern is that sell-side forecasts look too high, certainly
true in some cases (but not all), with the result that share prices have
certainly moved. We believe many of our longs are already pricing in very
bearish scenarios (indeed as some of our short positions are now, which
we’ve reduced) and we continue to believe in the ability of many of our
longs to achieve double-digit growth over many years. Some names are now
trading on free cash flow yields of 4-5% and as such represent significant
value for us. It would seem many of the management teams agree, judging by the
size of share buy-back programmes that have been commenced in recent weeks,
and, as we have articulated before, we own many companies where a sizeable
percentage of their market cap is in net cash. Furthermore, at a time of
increased economic uncertainty, we think differentiated companies with strong
pricing power and enviable market positions and long-term prospects for
earnings growth are more valuable than ever.
We understand that the year to date may have been disappointing for our
shareholders. We appreciate your ongoing support and can assure you that our
confidence in the recovery of our long book is undiminished. We remain of the
view that there is significant upside to come in time.
Dan Whitestone
BlackRock Investment Management (UK) Limited
20 July 2022
PORTFOLIO OF INVESTMENTS
TOP TEN
1 + GAMMA COMMUNICATIONS* (2021: 3rd)
Mobile Telecommunications
Market value: £23,429,000
Share of net assets: 3.4% (2021: 3.1%)
Provider of communication services to UK businesses.
2 - Electrocomponents (2021: 1st)
Support Services
Market value: £22,237,000¹
Share of net assets: 3.2% (2021: 3.5%)
Distributor of industrial and electronic products.
3 + CVS Group* (2021: 12th)
General Retailers
Market value: £21,184,000
Share of net assets: 3.1% (2021: 1.9%)
Operator of veterinary surgeries.
4 - Watches of Switzerland (2021: 2nd)
Personal Goods
Market value: £20,721,000
Share of net assets: 3.0% (2021: 3.3%)
Retailer of luxury watches.
5 + Auction Technology Group (2021: 7th)
General Retailers
Market value: £19,859,000¹
Share of net assets: 2.9% (2021: 2.7%)
Operator of marketplaces for curated online auctions.
6 = Oxford Instruments (2021: 6th)
Electronic & Electrical Equipment
Market value: £19,449,000¹
Share of net assets: 2.8% (2021: 2.7%)
Designer and manufacturer of tools and systems for industry and research.
7 + YouGov* (2021: 10th)
Media
Market value: £18,867,000
Share of net assets: 2.7% (2021: 2.3%)
Provider of survey data and specialist data analytics.
8 + WH Smith (2021: 24th)
General Retailers
Market value: £17,276,000
Share of net assets: 2.5% (2021: 1.5%)
Retailer of books, stationery, magazines, newspapers and confectionery.
9 - Dechra Pharmaceuticals (2021: 8th)
Pharmaceuticals & Biotechnology
Market value: £15,869,000
Share of net assets: 2.3% (2021: 2.5%)
Developer and supplier of pharmaceutical and other products focused on the
veterinary market.
10 - Impax Asset Management* (2021: 4th)
Financial Services
Market value: £15,544,000
Share of net assets: 2.2% (2021: 2.9%)
Provider of asset management services.
* Traded on the Alternative Investment Market (AIM) of the London
Stock Exchange.
1 Includes long derivative positions.
+, - and = indicate the change in the relative ranking of the position in the
Top ten holdings compared to its ranking as at 30 November 2021.
All percentages reflect the value of the holding as a percentage of net
assets.
Percentages in brackets represent the value of the holding as at 30 November
2021.
# Company £’000 % Description
11 Baltic Classifieds Group Software & Computer Services 15,483¹ 2.2 Operator of online classified businesses in the Baltics
12 Computacenter Software & Computer Services 15,426¹ 2.2 Computer services
13 IntegraFin Financial Services 14,606¹ 2.1 UK savings platform for financial advisors
14 Ergomed* Pharmaceuticals & Biotechnology 14,283¹ 2.1 Provider of pharmaceuticals services
15 SigmaRoc* Construction & Materials 14,106 2.0 Buy-and-build group targeting construction materials assets in the UK and Northern Europe
16 Sirius Real Estate Real Estate Investment & Services 13,763 2.0 Owner and operator of business parks, offices and industrial complexes in Germany
17 Workspace Group Real Estate Investment Trusts 13,366¹ 1.9 Supply of flexible workspace to businesses in London
18 Grafton Group Support Services 13,051 1.9 Builders merchants in the UK, Ireland and Netherlands
19 Next Fifteen Communications* Media 12,881 1.9 Provider of digital communication products and services
20 Leslie’s Leisure Goods 12,864¹ 1.9 US direct to consumer retailer of swimming pool maintenance products
21 Breedon* Construction & Materials 12,447 1.8 Supplier of construction materials
22 Diploma Support Services 12,252¹ 1.8 Supplier of specialised technical products and services
23 Dunelm Group General Retailers 11,635¹ 1.7 Retailer of homeware products
24 Mattioli Woods* Financial Services 11,026 1.6 Provider of wealth management services
25 Euronext Financial Services 10,768¹ 1.6 European stock exchange
26 Tatton Asset Management* Financial Services 10,728 1.5 Provision of discretionary fund management services to the IFA market
27 XP Power Electronic & Electrical Equipment 10,431 1.5 Leading provider of power solutions
28 Games Workshop Leisure Goods 10,138¹ 1.5 Developer, publisher and manufacturer of miniature war games
29 4imprint Group Media 10,113 1.5 Supplier of promotional merchandise in the US
30 Bytes Technology Software & Computer Services 9,639 1.4 Specialist in software, security and cloud services
31 Alliance Pharma* Pharmaceuticals & Biotechnology 9,526 1.4 Distributor of pharmaceutical and healthcare products
32 Qinetiq Group Aerospace & Defence 9,166 1.3 Provider of scientific and technological services to the defence, security and aerospace markets
33 Spirent Technology Hardware & Equipment 9,059 1.3 Multinational telecommunications testing
34 Morgan Sindall Construction & Materials 8,818¹ 1.3 Supplier of office fit out, construction and urban regeneration services
35 Genuit Group Construction & Materials 8,464 1.2 Manufacturer of plastic piping systems
36 Treatt Chemicals 8,118 1.2 Developer and manufacturer of ingredients for the flavour and fragrance industry
37 Pets at Home General Retailers 8,083 1.2 Retailer of pet supplies
38 Learning Technologies* Software & Computer Services 8,005 1.2 Provider of e-learning services
39 DiscoverIE Electronic & Electrical Equipment 7,459¹ 1.1 International designer, manufacturer and supplier of customised electronics
40 Robert Walters Support Services 7,125 1.0 Provider of specialist recruitment services
41 Dart Group* Travel & Leisure 7,002 1.0 Low cost tour operator and airline
42 Londonmetric Property Real Estate Investment Trusts 6,998¹ 1.0 Investor in, and developer of property
43 Spectris Electronic & Electrical Equipment 6,686 1.0 Supplier of productivity enhancing instrumentation and controls
44 OSB Group Financial Services 6,674 1.0 Specialist lending business
45 Alfa Financial Software Software & Computer Services 6,652 1.0 Provider of software to the finance industry
46 Howden Joinery Group General Retailers 6,429¹ 0.9 Kitchen and joinery product supplier
47 Safestore Real Estate Investment Trusts 6,079 0.9 Provider of self-storage units
48 GB Group* Software & Computer Services 6,016 0.9 Developer and supplier of identity verification solutions
49 Young & Co’s Brewery* Travel & Leisure 6,014 0.9 Owner and operator of pubs mainly in the London area
50 Johnson Service Group* Support Services 6,005 0.9 Provider of textile services
51 Hunting Oil Equipment and Services 5,763¹ 0.8 Oil services business
52 Boku* Support Services 5,585 0.8 Digital payments platform
53 AJ Bell Financial Services 5,426 0.8 UK savings platform for financial advisors & individual Investors
54 Team17* Leisure Goods 5,265 0.8 Video game developer and publisher
55 Restore* Support Services 5,018 0.7 Records management business
56 Xero* Software & Computer Services 5,005¹ 0.7 Software company specialising in accounting for small businesses
57 Axon Enterprise Support Services 4,972¹ 0.7 US based provider of technology and weapons products
58 The Pebble Group* Media 4,892 0.7 Designer and manufacturer of promotional goods
59 Clarkson Industrial Transportation 4,862 0.7 Provider of shipping services
60 Accesso Technology* Software & Computer Services 4,857¹ 0.7 Provider of ticketing and virtual queuing solutions
61 Polar Capital Holdings* Financial Services 4,698 0.7 Provider of investment management services
62 Hiscox Non-life Insurance 4,542¹ 0.6 Provision of insurance services
63 Judges Scientific* Electronic & Electrical Equipment 4,537 0.6 Designer and producer of scientific instruments
64 Moneysupermarket.com Software & Computer Services 4,425¹ 0.6 Price comparison website specialising in financial services
65 Rotork Electronic & Electrical Equipment 4,404 0.6 Manufacturer of industrial flow equipment
66 GlobalData* Media 4,254¹ 0.6 Data analytics and consulting
67 Zotefoams Chemicals 3,939¹ 0.6 Manufacturer of polyolefin foams used in sport, construction, marine, automation, medical equipment and aerospace
68 Anpario* Pharmaceuticals & Biotechnology 3,900 0.6 Manufacturer and distributor of natural animal feed additives for animal health, nutrition and biosecurity
69 Ashmore Group Financial Services 3,858¹ 0.6 Emerging Market focused investment manager
70 Hill & Smith Holdings Industrial Metals & Mining 3,853 0.6 Supplier of infrastructure products and galvanizing services
71 Babcock International Group Aerospace & Defence 3,767 0.6 British aerospace, defence and nuclear engineering services company
72 Animalcare Group* Pharmaceuticals & Biotechnology 3,709 0.5 Veterinary pharmaceuticals business
73 Eckoh* Software & Computer Services 3,690 0.5 Global provider of secure payments products
74 Advanced Medical Solutions Group* Healthcare Equipment & Services 3,586¹ 0.5 Developer and manufacturer of advanced wound care solutions
75 Domo Software & Computer Services 3,309¹ 0.5 US based operator of mobile, cloud-based operating systems
76 Porvair Industrial Engineering 3,223 0.5 Specialist filtration and environmental technology
77 SThree Support Services 3,117 0.4 Provider of specialist professional recruitment services
78 888 Travel & Leisure 2,997 0.4 Operator and platform for online gaming
79 Vistry Group Household Goods & Home Construction 2,931 0.4 UK housebuilder
80 Five9 Software & Computer Services 2,875¹ 0.4 Provider of cloud-based contact centre software
81 Kainos Group Software & Computer Services 2,854¹ 0.4 Provider of digital technology solutions
82 Genus Pharmaceuticals & Biotechnology 2,821 0.4 Animal genetics company
83 Balfour Beatty Construction & Materials 2,730¹ 0.4 Multinational infrastructure group
84 Luceco Electronic & Electrical Equipment 2,703 0.4 Supplier and manufacturer of high quality LED lighting products
85 Renishaw Electronic & Electrical Equipment 2,696 0.4 Engineering and scientific technology company
86 Kier Group Support Services 2,663 0.4 UK construction, services and property group
87 AB Dynamics* Industrial Engineering 2,577 0.4 Developer and supplier of specialist automotive testing systems
88 Gooch & Housego* Electronic & Electrical Equipment 2,516 0.4 Designer and manufacturer of advanced photonic systems
89 Craneware* Software & Computer Services 2,366 0.3 Provider of financial business software for US hospitals
90 Moonpig General Retailers 2,211 0.3 Internet based provider of personalised cards and gifts
91 MaxCyte* Pharmaceuticals & Biotechnology 1,791 0.3 Clinical-stage global cell-based therapies and life sciences company
92 Serica Energy* Oil, Gas & Coal 1,574 0.2 Oil and gas producer
93 Health Catalyst Healthcare Equipment & Services 1,386¹ 0.2 Provider of data and analytics technology and services to healthcare organizations
94 Chapel Down† Beverages 1,117 0.2 UK producer of sparkling and still wines, and Curious beers and ciders
------------ ------------
Long investment positions (excluding BlackRock’s Institutional Cash Series plc - Sterling Liquid Environmentally Aware Fund) 751,083 108.8
======= =======
Short investment positions (43,347) (6.3)
======= =======
1 Includes long derivative positions.
* Traded on the Alternative Investment Market (AIM) of the London
Stock Exchange.
† Traded on the Aquis Stock Exchange (AQSE) (formally the NEX
exchange). AQSE is a stock market providing primary and secondary markets for
equity and debt products. It is permissioned as a Recognised Investment
Exchange, which allows it to operate a regulated listings venue.
Percentages shown are the share of net assets.
At 31 May 2022, the Company held equity interests in 5 companies comprising
more than 3% of a company’s share capital as follows: Tatton Asset
Management: 4.3%; SigmaRoc: 3.4%; Eckoh: 3.3%; Mattioli Woods: 3.1%; and
Anpario: 3.0%.
FAIR VALUE AND GROSS MARKET EXPOSURE OF INVESTMENTS AS AT 31 MAY 2022
Fair value (1) Gross market exposure (2) Gross market exposure as a % of net assets (2)
£’000 £’000 31 May 2022 31 May 2021 30 November 2021
Long investment positions (excluding BlackRock’s Institutional Cash Series plc – Sterling Liquid Environmentally Aware Fund) 632,020 751,083 108.8 121.8 121.4
Short investment positions (1) (816) (43,347) (6.3) (1.5) (2.7)
Cash and cash equivalents (1,3) 228 (76,304) (11.0) (21.8) (21.1)
BlackRock’s Institutional Cash Series plc – Sterling Liquid Environmentally Aware Fund 67,645 67,645 9.8 3.1 2.7
Other net current liabilities (8,904) (8,904) (1.3) (1.6) (0.3)
----------------- ----------------- ----------------- ----------------- -----------------
Net assets 690,173 690,173 100.0 100.0 100.0
========== ========== ========== ========== ==========
The Company uses gearing through the use of long and short CFD positions.
Gross and Net Gearing as at 31 May 2022 were 115.1% and 102.5% respectively
(31 May 2021: 123.3% and 120.3%; year ended 30 November 2021: 124.1% and
118.7%). Gross and Net Gearing are Alternative Performance Measures, see
Glossary contained within the Half Yearly Financial Report.
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 values of the long and short investment
positions above is determined based on the difference between the purchase or
transaction 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 derivative positions directly in
the market would have amounted to £119,063,000 at the time of purchase, and
subsequent market rises in prices have resulted in unrealised gains on the
long derivative positions of £8,737,000, resulting in the value of the total
market exposure to the underlying securities increasing to £127,800,000 as at
31 May 2022.
– The notional price of selling the securities to which exposure was
gained via the short derivative positions would have been £42,531,000 at the
time of entering into the contract, and subsequent price rises have resulted
in unrealised losses on the short derivative positions of £816,000 and the
value of the market exposure of these investments increasing to £43,347,000
at 31 May 2022. If the short derivative positions had been closed on 31 May
2022 this would have resulted in a loss of £816,000 for the Company.
2 Market exposure in the case of equity investments is the same as
fair value. In the case of long and short derivative positions it is the
market value of the underlying shares to which the portfolio is exposed via
the contract.
3 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 long and short investment positions.
DISTRIBUTION OF INVESTMENTS AS AT 31 MAY 2022
Sector % of long portfolio % of short portfolio % of net portfolio
Oil Equipment and Services 0.8 0.0 0.8
Oil, Gas & Coal 0.3 0.0 0.3
----------------- ----------------- -----------------
Oil & Gas 1.1 0.0 1.1
========== ========== ==========
Chemicals 1.7 (0.1) 1.6
Industrial Metals & Mining 0.6 0.0 0.6
----------------- ----------------- -----------------
Basic Materials 2.3 (0.1) 2.2
========== ========== ==========
Renewable Energy Equipment 0.0 (0.2) (0.2)
----------------- ----------------- -----------------
Energy 0.0 (0.2) (0.2)
========== ========== ==========
Aerospace & Defence 1.8 0.0 1.8
Construction & Materials 6.6 (0.4) 6.2
Electronic & Electrical Equipment 8.6 0.0 8.6
Industrial Engineering 0.8 0.0 0.8
Industrial Transportation 0.7 0.0 0.7
Support Services 11.6 (0.2) 11.4
----------------- ----------------- -----------------
Industrials 30.1 (0.6) 29.5
========== ========== ==========
Beverages 0.2 0.0 0.2
Household Goods & Home Construction 0.4 (0.2) 0.2
Personal Goods 2.9 (0.2) 2.7
----------------- ----------------- -----------------
Consumer Staples 3.5 (0.4) 3.1
========== ========== ==========
Healthcare Equipment & Services 0.7 (0.4) 0.3
Pharmaceuticals & Biotechnology 7.3 0.0 7.3
----------------- ----------------- -----------------
Health Care 8.0 (0.4) 7.6
========== ========== ==========
General Retailers 12.2 (0.3) 11.9
Household Furnishings 0.0 (0.1) (0.1)
Leisure Goods 4.0 0.0 4.0
Media 7.2 0.0 7.2
Specialty Retailers 0.0 (0.3) (0.3)
Travel & Leisure 2.3 0.0 2.3
----------------- ----------------- -----------------
Consumer Discretionary 25.7 (0.7) 25.0
========== ========== ==========
Closed-end Investments 0.0 (0.4) (0.4)
Financial Services 11.8 (2.9) 8.9
Non-life Insurance 0.6 0.0 0.6
----------------- ----------------- -----------------
Financials 12.4 (3.3) 9.1
========== ========== ==========
Real Estate Investment & Services 1.9 0.0 1.9
Real Estate Investment Trusts 3.7 (0.2) 3.5
----------------- ----------------- -----------------
Real Estate 5.6 (0.2) 5.4
========== ========== ==========
Software & Computer Services 12.8 (0.1) 12.7
Technology Hardware & Equipment 1.3 (0.1) 1.2
----------------- ----------------- -----------------
Technology 14.1 (0.2) 13.9
========== ========== ==========
Mobile Telecommunications 3.3 0.0 3.3
----------------- ----------------- -----------------
Telecommunications 3.3 0.0 3.3
========== ========== ==========
Total Investments 106.1 (6.1) 100.0
========== ========== ==========
The above percentages are calculated on the net portfolio as at 31 May 2022.
The net portfolio is calculated as long equity and derivative positions, less
short derivative positions as at 31 May 2022.
ANALYSIS OF THE PORTFOLIO
Market capitalisation as at 31 May 2022
Long positions (1) Short positions
£2.5bn+ 19.3% -0.7%
£2bn – £2.5bn 12.8% 0.0%
£1.5bn – £2bn 7.4% -0.7%
£1bn – £1.5bn 31.9% -0.9%
£500m – £1bn 21.7% -0.9%
£0m – £500m 13.0% -2.9%
1 The above investments may comprise exposures to long equity and long
derivative positions.
Source: BlackRock.
Position size as at 31 May 2022
Long positions (1) Short positions
£20m + 4 -1
£15m – £20m 8 0
£10m – £15m 17 0
£5m – £10m 27 0
£0m – £5m 38 -15
1 The above investments may comprise exposures to long equity and long
derivative positions.
Source: BlackRock.
PORTFOLIO HOLDINGS WITHIN KEY BENCHMARK INDICES
Gross Basis(1)
FTSE 250 48.6%
FTSE AIM 34.1%
Other 7.9%
FTSE Small Cap 6.3%
FTSE 100 3.1%
Net Basis(2)
FTSE 250 50.6%
FTSE AIM 37.4%
Other 1.8%
FTSE Small Cap 6.7%
FTSE 100 3.5%
PORTFOLIO HOLDINGS WITHIN BENCHMARK INDEX (the Numis Smaller Companies plus
AIM (excluding Investment companies)
Gross Basis(1,3)
Held in Benchmark 57.9%
Other 42.1%
Net Basis(2,3)
Held in Benchmark 55.7%
Other 44.3%
Source: BlackRock.
1 Long exposure plus short exposure as a percentage of the portfolio
in aggregate excluding investment in BlackRock’s Institutional Cash Series
plc – Sterling Liquid Environmentally Aware Fund.
2 Long exposure less short exposure as a percentage of the portfolio
excluding investment in BlackRock’s Institutional Cash Series plc –
Sterling Liquid Environmentally Aware Fund.
3 Holdings included within the Benchmark Index as at 31 May 2021 were
59.1% on a Gross Basis and 58.2% on a Net Basis.
INTERIM MANAGEMENT REPORT AND RESPONSIBILITY STATEMENT
The Chairman’s Statement and the Investment Manager’s Report above give
details of the important events which have occurred during the period and
their impact on the financial statements.
Principal risks and uncertainties
The principal risks faced by the Company can be divided into various areas as
follows:
* 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 2021. A detailed explanation can be found in the Strategic Report on
pages 41 to 44 and in note 16 on pages 106 to 118 of the Annual Report and
Financial Statements which are available on the website maintained by
BlackRock at www.blackrock.com/uk/thrg.
Certain financial markets have fallen towards the end of the financial period
due primarily to geo-political tensions arising from Russia’s invasion of
Ukraine and the impact of the subsequent range of sanctions, regulations and
other measures which impaired normal trading in Russian securities.
The Directors have also assessed the impact of market conditions arising from
the conflict in Ukraine and the ongoing COVID-19 outbreak on the Company’s
ability to meet its investment objective. Based on the latest available
information, the Company continues to be managed in line with its investment
objective, with no disruption to its operations.
In the view of the Board, there have not been any changes to the fundamental
nature of the principal risks and uncertainties since the previous report and
these are equally applicable to the remaining six months of the financial year
as they were to the six months under review.
RELATED PARTY DISCLOSURE AND TRANSACTIONS WITH THE INVESTMENT MANAGER
BlackRock Fund Managers Limited (BFM) was appointed as the Company’s
Alternative Investment Fund Manager (AIFM) with effect from 2 July 2014. BFM
has (with the Company’s consent) delegated certain portfolio and risk
management services, and other ancillary services, to BlackRock Investment
Management (UK) Limited (BIM (UK)). Both BFM and BIM (UK) are regarded as
related parties under the Listing Rules. Details of the fees payable are set
out in note 4 and note 11 of the financial statements below.
The related party transactions with the Directors are set out in note 12 of
the financial statements below.
GOING CONCERN
The Board remains mindful of the ongoing uncertainty surrounding the potential
duration of the COVID-19 pandemic and its longer-term effects on the global
economy and the current heightened geo-political risk. Nevertheless, the
Directors, having considered the nature and liquidity of the portfolio, the
Company’s investment objective and the Company’s projected income and
expenditure, are satisfied that the Company has adequate resources to continue
in operational existence for the foreseeable future and is financially sound.
The Board is still mindful of the COVID-19 pandemic and its longer-term
effects on the global economy and recovery of economies. The Board believes
that the Company and its key third-party service providers have in place
appropriate business continuity plans and these services have continued to be
supplied without interruption throughout the COVID-19 pandemic.
The Company has a portfolio of investments which are predominantly readily
realisable and is able to meet all its liabilities from these assets.
Accounting revenue and expense forecasts are maintained and reported to the
Board regularly and it is expected that the Company will be able to meet all
its obligations. Ongoing charges for the year ended 30 November 2021 were
0.57% of net assets and it is expected that this is unlikely to change
significantly going forward.
Based on the above, the Board is satisfied that it is appropriate to continue
to adopt the going concern basis in preparing the financial statements.
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 not been audited or reviewed by the
Company’s Auditor.
The Half Yearly Financial Report was approved by the Board on 20 July 2022 and
the above responsibility statement was signed on its behalf by the Chairman.
Christopher Samuel
For and on behalf of the Board
20 July 2022
STATEMENT OF COMPREHENSIVE INCOME FOR THE SIX MONTHS ENDED 31 MAY 2022
Six months ended 31 May 2022 (unaudited) Six months ended 31 May 2021 (unaudited) Year ended 30 November 2021 (audited)
Notes Revenue £’000 Capital £’000 Total £’000 Revenue £’000 Capital £’000 Total £’000 Revenue £’000 Capital £’000 Total £’000
Income from investments held at fair value through profit or loss 3 5,966 91 6,057 5,017 – 5,017 12,188 – 12,188
Net income from derivatives 3 1,119 – 1,119 644 – 644 1,272 – 1,272
Other income 3 76 – 76 3 – 3 7 – 7
-------------- -------------- -------------- -------------- -------------- -------------- -------------- -------------- --------------
Total revenue 7,161 91 7,252 5,664 – 5,664 13,467 – 13,467
======== ======== ======== ======== ======== ======== ======== ======== ========
Net (loss)/profit on investments held at fair value through profit or loss – (200,574) (200,574) – 173,076 173,076 – 192,102 192,102
Net (loss)/profit on foreign exchange – (507) (507) – (43) (43) – 141 141
Net (loss)/profit from derivatives – (53,754) (53,754) – 18,289 18,289 – 29,070 29,070
-------------- -------------- -------------- -------------- -------------- -------------- -------------- -------------- --------------
Total 7,161 (254,744) (247,583) 5,664 191,322 196,986 13,467 221,313 234,780
======== ======== ======== ======== ======== ======== ======== ======== ========
Expenses
Investment management fee and performance fees 4 (438) (1,315) (1,753) (399) (7,115) (7,514) (913) (9,394) (10,307)
Other operating expenses 5 (418) (10) (428) (492) (14) (506) (1,078) (27) (1,105)
-------------- -------------- -------------- -------------- -------------- -------------- -------------- -------------- --------------
Total operating expenses (856) (1,325) (2,181) (891) (7,129) (8,020) (1,991) (9,421) (11,412)
======== ======== ======== ======== ======== ======== ======== ======== ========
Net profit/(loss) on ordinary activities before finance costs and taxation 6,305 (256,069) (249,764) 4,773 184,193 188,966 11,476 211,892 223,368
Finance costs (2) (7) (9) (1) (3) (4) (1) (4) (5)
-------------- -------------- -------------- -------------- -------------- -------------- -------------- -------------- --------------
Net profit/(loss) on ordinary activities before taxation 6,303 (256,076) (249,773) 4,772 184,190 188,962 11,475 211,888 223,363
Taxation – – – (23) – (23) (29) – (29)
-------------- -------------- -------------- -------------- -------------- -------------- -------------- -------------- --------------
Net profit/(loss) on ordinary activities after taxation 6,303 (256,076) (249,773) 4,749 184,190 188,939 11,446 211,888 223,334
======== ======== ======== ======== ======== ======== ======== ======== ========
Earnings/(loss) per ordinary share (pence) 7 6.12 (248.72) (242.60) 5.24 203.20 208.44 12.15 224.96 237.11
======== ======== ======== ======== ======== ======== ======== ======== ========
The total column of this statement represents the Company’s Statement of
Comprehensive Income, prepared in accordance with UK-adopted International
Accounting Standards (IASs). The supplementary revenue and capital accounts
are both prepared under guidance published by the Association of Investment
Companies (AIC). All items in the above statement derive from continuing
operations. No operations were acquired or discontinued during the period. All
income is attributable to the equity holders of the Company.
The Company does not have any other comprehensive income/(loss). The net
profit/(loss) for the period disclosed above represents the Company’s total
comprehensive income/(loss).
STATEMENT OF CHANGES IN EQUITY FOR THE SIX MONTHS ENDED 31 MAY 2022
Note Called up share capital £’000 Share premium account £’000 Capital redemption reserve £’000 Special reserve £’000 Capital reserves £’000 Revenue reserve £’000 Total £’000
For the six months ended 31 May 2022 (unaudited)
At 30 November 2021 5,072 225,660 11,905 44,582 637,028 10,901 935,148
Total comprehensive income:
Net (loss)/profit for the period – – – – (256,076) 6,303 (249,773)
Transactions with owners, recorded directly to equity:
Ordinary shares issued 89 16,479 – – – – 16,568
Share issue costs – (17) – – – – (17)
Ordinary shares bought back into treasury – – – (3,482) – – (3,482)
Share purchase costs – – – (16) – – (16)
Dividends paid (1) 6 – – – – – (8,255) (8,255)
-------------- -------------- -------------- -------------- -------------- -------------- --------------
At 31 May 2022 5,161 242,122 11,905 41,084 380,952 8,949 690,173
======== ======== ======== ======== ======== ======== ========
For the six months ended 31 May 2021 (unaudited)
At 30 November 2020 4,376 101,368 11,905 44,580 425,140 8,846 596,215
Total comprehensive income:
Net profit for the period – – – – 184,190 4,749 188,939
Transactions with owners, recorded directly to equity:
Ordinary shares issued 301 47,936 – – – – 48,237
Share issue costs – (48) – – – – (48)
Dividends paid (2) – – – – – (6,972) (6,972)
-------------- -------------- -------------- -------------- -------------- -------------- --------------
At 31 May 2021 4,677 149,256 11,905 44,580 609,330 6,623 826,371
======== ======== ======== ======== ======== ======== ========
For the year ended
30 November 2021 (audited)
At 30 November 2020 4,376 101,368 11,905 44,580 425,140 8,846 596,215
Total comprehensive income:
Net profit for the year – – – – 211,888 11,446 223,334
Transactions with owners, recorded directly to equity:
Ordinary shares issued 696 124,418 – – – – 125,114
Share issue costs – (126) – – – – (126)
Tender costs written back – – – 2 – – 2
Dividends paid (3) – – – – – (9,391) (9,391)
-------------- -------------- -------------- -------------- -------------- -------------- --------------
At 30 November 2021 5,072 225,660 11,905 44,582 637,028 10,901 935,148
======== ======== ======== ======== ======== ======== ========
1. Final dividend of 8.00p per share for the year ended 30 November 2021,
declared on 7 February 2022 and paid on 31 March 2022.
2. Final dividend of 7.70p per share for the year ended 30 November 2020,
declared on 10 February 2021 and paid on 1 April 2021.
3. Final dividend of 7.70p per share for the year ended 30 November 2020,
declared on 10 February 2021 and paid on 1 April 2021 and interim dividend of
2.50p per share for the year ended 30 November 2021, declared on 23 July 2021
and paid on 27 August 2021.
For information on the Company’s distributable reserves, please refer to
note 9 below.
STATEMENT OF FINANCIAL POSITION AS AT 31 MAY 2022
Notes 31 May 2022 (unaudited) £’000 31 May 2021 (unaudited) £’000 30 November 2021 (audited) £’000
Non current assets
Investments held at fair value through profit or loss 10 623,283 809,636 921,204
Current assets
Current tax asset 141 16 81
Other receivables 3,529 4,437 2,984
Derivative financial assets held at fair value through profit or loss 10,056 3,632 –
Cash collateral pledged with brokers 4,730 – 7,380
Cash and cash equivalents 67,873 26,547 25,223
-------------- -------------- --------------
Total current assets 86,329 34,632 35,668
======== ======== ========
Total assets 709,612 844,268 956,872
======== ======== ========
Current liabilities
Other payables (14,904) (13,714) (13,008)
Derivative financial liabilities held at fair value through profit or loss (2,135) (153) (8,716)
Liability for cash collateral received (2,400) (4,030) –
-------------- -------------- --------------
Total current liabilities (19,439) (17,897) (21,724)
======== ======== ========
Net assets 690,173 826,371 935,148
======== ======== ========
Equity attributable to equity holders
Called up share capital 8 5,161 4,677 5,072
Share premium account 242,122 149,256 225,660
Capital redemption reserve 11,905 11,905 11,905
Special reserve 41,084 44,580 44,582
Capital reserves 380,952 609,330 637,028
Revenue reserve 8,949 6,623 10,901
-------------- -------------- --------------
Total equity 7 690,173 826,371 935,148
======== ======== ========
Net asset value per ordinary share (pence) 7 672.58 883.45 921.91
======== ======== ========
CASH FLOW STATEMENT FOR THE SIX MONTHS ENDED 31 MAY 2022
Six months ended 31 May 2022 (unaudited) £’000 Six months ended 31 May 2021 (unaudited) £’000 Year ended 30 November 2021 (audited) £’000
Operating activities
Net (loss)/profit on ordinary activities before taxation (249,773) 188,962 223,363
Add back finance costs 9 4 5
Loss/(profit) on investments and derivatives held at fair value through profit or loss (including transaction costs) 253,923 (191,593) (221,688)
Net loss/(profit) on foreign exchange 507 43 (141)
Sales of investments held at fair value through profit or loss 217,580 190,761 322,822
Purchases of investments held at fair value through profit or loss (120,232) (237,096) (461,699)
Net (payments)/receipts on closure of derivatives (69,987) 19,041 42,306
Decrease/(increase) in other receivables 637 (732) (64)
Increase in other payables 3,780 2,340 3,517
(Increase)/decrease in amounts due from brokers (2,312) 2,062 3,977
Decrease in amounts due to brokers (2,367) (2,915) (4,798)
Net cash collateral received/(pledged) 5,050 2,870 (8,540)
-------------- -------------- --------------
Net cash inflow/(outflow) from operating activities before taxation 36,815 (26,253) (100,940)
Taxation paid (60) (12) (83)
-------------- -------------- --------------
Net cash inflow/(outflow) from operating activities 36,755 (26,265) (101,023)
======== ======== ========
Financing activities
Interest paid (9) (4) (5)
Cash proceeds from ordinary shares issued 17,681 48,189 123,859
Cash paid for ordinary shares bought back into treasury (3,015) – –
Dividends paid (8,255) (6,972) (9,391)
-------------- -------------- --------------
Net cash inflow from financing activities 6,402 41,213 114,463
======== ======== ========
Increase in cash and cash equivalents 43,157 14,948 13,440
Effect of foreign exchange rate changes (507) (43) 141
======== ======== ========
Change in cash and cash equivalents 42,650 14,905 13,581
Cash and cash equivalents at start of period 25,223 11,642 11,642
-------------- -------------- --------------
Cash and cash equivalents at end of the period 67,873 26,547 25,223
======== ======== ========
Comprised of:
Cash at bank 228 850 143
Cash Fund (1) 67,645 25,697 25,080
-------------- -------------- --------------
67,873 26,547 25,223
======== ======== ========
1 Cash Fund represents funds invested in the BlackRock Institutional
Cash Series plc - Sterling Liquid Environmentally Aware Fund.
NOTES TO THE FIANCIAL STATEMENTS FOR THE SIX MONTHS ENDED 31 MAY 2022
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 PRESENTATION
The Half Yearly Financial Statements for the six month period ended 31 May
2022 have been prepared in accordance with the Disclosure Guidance and
Transparency Rules sourcebook of the Financial Conduct Authority and with the
UK-adopted International Accounting Standard 34 (IAS 34), Interim Financial
Reporting. The Half Yearly Financial Statements should be read in conjunction
with the Company’s Annual Report and Financial Statements for the year ended
30 November 2021, which have been prepared in accordance with International
Accounting Standards (IASs) in conformity with the requirements of the
Companies Act 2006.
Insofar as the Statement of Recommended Practice (SORP) for investment trust
companies and venture capital trusts, issued by the Association of Investment
Companies (AIC) in October 2019 and updated in April 2021, is compatible with
UK-adopted IASs, the financial statements have been prepared in accordance
with guidance set out in the SORP.
Adoption of new and amended standards and interpretations:
Amendments to IFRS 9, IAS 39 and IFRS 7 - Interest rate benchmark reform Phase
2 (effective 1 January 2021). The Phase 2 amendments address issues that might
affect financial reporting during the reform of an interest rate benchmark,
including the effects of changes to contractual cash flows or hedging
relationships arising from the replacement of an interest rate benchmark with
an alternative benchmark rate (replacement issues).
The objectives of the Phase 2 amendments are to assist companies in:
* applying IFRS Standards when changes are made to contractual cash flows or
hedging relationships because of the interest rate benchmark reform; and
* providing useful information to users of financial statements.
In Phase 2 of its project, the Board amended requirements in IFRS 9 Financial
Instruments, IAS 39 Financial Instruments: Recognition and Measurement, IFRS 7
Financial Instruments: Disclosures, IFRS 4 Insurance Contracts and IFRS 16
Leases relating to:
* changes in the basis for determining contractual cash flows of financial
assets, financial liabilities and lease liabilities;
* hedge accounting; and
* disclosures.
The Phase 2 amendments apply only to changes required by the interest rate
benchmark reform to financial instruments and hedging relationships.
These amendments have been adopted by the UK. The adoption of these amendments
did not have any significant impact on the Company.
International Accounting Standards that have yet to be adopted:
IFRS 17 – Insurance contracts (effective 1 January 2023). This standard
replaces IFRS 4, which currently permits a wide range of accounting practices
in accounting for insurance contracts. IFRS 17 will fundamentally change the
accounting by all entities that issue insurance contracts and investment
contracts with discretionary participation features. This standard is unlikely
to have any impact on the Company as it has no insurance contracts.
IAS 12 – Deferred tax related to assets and liabilities arising from a
single transaction (effective 1 January 2023). The IASB has amended IAS 12
Income Taxes to require companies to recognise deferred tax on particular
transactions that, on initial recognition, give rise to equal amounts of
taxable and deductible temporary differences. According to the amended
guidance, a temporary difference that arises on initial recognition of an
asset or liability is not subject to the initial recognition exemption if that
transaction gave rise to equal amounts of taxable and deductible temporary
differences. These amendments might have a significant impact on the
preparation of financial statements by companies that have substantial
balances of right-of-use assets, lease liabilities, decommissioning,
restoration and similar liabilities. The impact for those affected would be
the recognition of additional deferred tax assets and liabilities.
The amendment of this standard is unlikely to have any significant impact on
the Company.
3. INCOME
Six months ended 31 May 2022 (unaudited) £’000 Six months ended 31 May 2021 (unaudited) £’000 Year ended 30 November 2021 (audited) £’000
Investment income:
UK dividends 4,244 3,736 8,940
UK special dividends (1) 576 251 1,320
UK stock dividends 44 21 108
UK REIT dividends 210 135 464
Overseas dividends 892 704 1,186
Overseas special dividends (1) – 170 170
-------------- -------------- --------------
Total investment income 5,966 5,017 12,188
======== ======== ========
Net income from derivatives 1,119 644 1,272
Other income:
Deposit interest 10 – –
Interest from Cash Fund 66 3 7
-------------- -------------- --------------
76 3 7
======== ======== ========
Total income 7,161 5,664 13,467
======== ======== ========
(1) UK and overseas special dividends are split out on a country of domicile
basis.
Dividends and interest received in cash in the six months ended 31 May 2022
amounted to £6,069,000 and £50,000 (six months ended 31 May 2021:
£4,435,000 and £2,000; year ended 30 November 2021: £11,919,000 and
£6,000).
Special dividends of £91,000 have been recognised in capital in the six
months ended 31 May 2022 (six months ended 31 May 2021: £nil; year ended 30
November 2021: £nil).
4. INVESTMENT MANAGEMENT AND PERFORMANCE FEES
Six months ended 31 May 2022 (unaudited) Six months ended 31 May 2021 (unaudited) Year ended 30 November 2021 (audited)
Revenue £’000 Capital £’000 Total £’000 Revenue £’000 Capital £’000 Total £’000 Revenue £’000 Capital £’000 Total £’000
Investment management fee 438 1,315 1,753 399 1,198 1,597 913 2,739 3,652
Performance fee – – – – 5,917 5,917 – 6,655 6,655
-------------- -------------- -------------- -------------- -------------- -------------- -------------- -------------- --------------
Total 438 1,315 1,753 399 7,115 7,514 913 9,394 10,307
======== ======== ======== ======== ======== ======== ======== ======== ========
The performance fee is 15% of Net Asset Value total return outperformance of
the Benchmark Index measured on a two year rolling basis annualised and is
applied on the average Gross Assets over two years. The performance fee is
calculated and accrued on a daily basis and payable on 30 November each year
in relation to the performance period ending on that date. Gross Assets are
defined as the economic exposure to the total long and short positions and all
derivative positions less current liabilities. There is a cap on the annual
total management and performance fees of 1.25% of average Gross Assets over a
two year period which has the effect of capping annual performance fees at
circa 0.9%.
On the first day of the financial year, any performance fee for the ongoing
performance period not yet recognised is accrued in the daily NAV released to
the London Stock Exchange on that day.
Performance fees have been wholly allocated to the capital account 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 2022, a performance fee of £nil has been accrued (six
months ended 31 May 2021: £5,917,000; year ended 30 November 2021:
£6,655,000).
The investment management fee is calculated at the rate of 0.35% per annum on
month end Gross Assets. The management fee is charged 25% to the revenue
account and 75% to the capital account of the Statement of Comprehensive
Income. There is no additional fee for company secretarial and administration
services.
5. OTHER OPERATING EXPENSES
Six months ended 31 May 2022 (unaudited) £’000 Six months ended 31 May 2021 (unaudited) £’000 Year ended 30 November 2021 (audited) £’000
Allocated to revenue:
Custody fees 5 8 12
Auditor’s remuneration (1) 26 26 52
Registrar’s fees 20 22 47
Directors’ emoluments 99 90 184
Broker fees 17 26 45
Depositary fees 48 39 92
Marketing fees 66 72 157
FCA fees 10 8 19
Printing and postage fees 22 51 76
AIC fees 11 8 16
Stock exchange listing fees 80 87 268
Other administrative costs 14 55 110
-------------- -------------- --------------
418 492 1,078
======== ======== ========
Allocated to capital:
Custody transaction charges (2) 10 14 27
-------------- -------------- --------------
428 506 1,105
======== ======== ========
1. No non-audit services were provided by the auditors.
2. For the six month period ended 31 May 2022, expenses of £10,000 (six
months ended 31 May 2021: £14,000; year ended 30 November 2021: £27,000)
were charged to the capital account of the Statement of Comprehensive Income.
This relates to transaction costs charged by the custodian on sale and
purchase trades.
The transaction costs incurred on the acquisition of investments amounted to
£378,000 for the six months ended 31 May 2022 (six months ended 31 May 2021:
£880,000; year ended 30 November 2021: £1,619,000). Costs relating to the
disposal of investments amounted to £147,000 for the six months ended 31 May
2022 (six months ended 31 May 2021: £134,000; year ended 30 November 2021:
£224,000). All transaction costs have been included within capital reserves.
6. DIVIDENDS
The Board has declared an interim dividend of 2.60p per share payable on 26
August 2022 to shareholders on the register at 29 July 2022 (six months ended
31 May 2021: interim dividend of 2.50p per share paid on 27 August 2021 to
shareholders on the register at 6 August 2021). This dividend has not been
accrued in the financial statements for the six months ended 31 May 2022 as,
under IAS, interim dividends are not recognised until paid. Dividends are
debited directly to reserves.
7. EARNINGS AND NET ASSET VALAUE PER ORDINARY SHARE
Total revenue return, capital return and net asset value per ordinary share
are shown below and have been calculated using the following:
Six months ended 31 May 2022 (unaudited) Six months ended 31 May 2021 (unaudited) Year ended 30 November 2021 (audited)
Net revenue profit attributable to ordinary shareholders (£’000) 6,303 4,749 11,446
Net capital (loss)/profit attributable to ordinary shareholders (£’000) (256,076) 184,190 211,888
-------------- -------------- --------------
Total (loss)/profit attributable to ordinary shareholders (£’000) (249,773) 188,939 223,334
======== ======== ========
Equity shareholders’ funds (£’000) 690,173 826,371 935,148
======== ======== ========
The weighted average number of ordinary shares in issue during the period on which the earnings per ordinary share was calculated was: 102,956,409 90,644,426 94,190,181
The actual number of ordinary shares in issue at the period end on which the net asset value per ordinary share was calculated was: 102,615,194 93,539,037 101,435,964
Earnings per ordinary share
Revenue earnings per share (pence) – basic and diluted 6.12 5.24 12.15
Capital (loss)/earnings per share (pence) – basic and diluted (248.72) 203.20 224.96
-------------- -------------- --------------
Total (loss)/earnings per share (pence) – basic and diluted (242.60) 208.44 237.11
======== ======== ========
There were no dilutive securities at the period end (six months ended 31 May
2021: nil; 30 November 2021: nil).
As at 31 May 2022 (unaudited) As at 31 May 2021 (unaudited) As at 30 November 2021 (audited)
Net asset value per ordinary share (pence) 672.58 883.45 921.91
Ordinary share price (pence) 635.00 891.00 935.00
======== ======== ========
8. CALLED UP SHARE CAPITAL
(unaudited) Ordinary shares in issue number Treasury shares number Total shares number Nominal value £’000
Allotted, called up and fully paid share capital comprised:
Ordinary shares of 5 pence each:
At 30 November 2021 101,435,964 – 101,435,964 5,072
Ordinary shares bought back into treasury (594,670) 594,670 – –
Ordinary shares issued 1,773,900 – 1,773,900 89
----------------- ----------------- ----------------- -----------------
At 31 May 2022 102,615,194 594,670 103,209,864 5,161
========== ========== ========== ==========
During the six months ended 31 May 2022, the Company bought back 594,670
ordinary shares into treasury (six months ended 31 May 2021: none; year ended
30 November 2021: none) for a total consideration of £3,498,000 (six months
ended 31 May 2021: £nil; year ended 30 November 2021: £nil) including
costs.
During the six months ended 31 May 2022, the Company issued 1,773,900 new
ordinary shares (six months ended 31 May 2021: 6,020,108; year ended 30
November 2021: 13,917,035) for a total consideration of £16,551,000 (six
months ended 31 May 2021: £48,189,000; year ended 30 November 2021:
£124,988,000) including costs.
Since 31 May 2022 and up to the latest practicable date of 18 July 2022, a
further 537,757 shares have been bought back into treasury for a total
consideration of £3,006,000. No further shares have been issued.
The ordinary shares give shareholders voting rights, the entitlement to all of
the capital growth in the Company’s assets and to all income from the
Company that is resolved to be distributed.
9. RESERVES
The share premium and capital redemption reserve are not distributable profits
under the Companies Act 2006. In accordance with ICAEW Technical Release
02/17BL on Guidance on Realised and Distributable Profits under the Companies
Act 2006, the special reserve and capital reserve may be used as distributable
profits for all purposes and, in particular, the repurchase by the Company of
its ordinary shares and for payments as dividends. In accordance with the
Company’s Articles of Association, the special reserve, capital reserves and
the revenue reserve may be distributed by way of dividend. The capital reserve
arising on the revaluation of investments of £47,224,000 (31 May 2021: gain
of £269,406,000; year ended 30 November 2021: gain of £238,163,000) is
subject to fair value movements and may not be readily realisable at short
notice, as such it may not be entirely distributable. The investments are
subject to financial risks; as such capital reserves (arising on investments
sold) and the revenue reserve may not be entirely distributable if a loss
occurred during the realisation of these investments.
10. VALUATION OF FINANCIAL INSTRUMENTS
Market risk arising from price risk
Price risk is the risk that the fair value or future cash flows of a financial
instrument will fluctuate because of changes in market prices (other than
those arising from interest rate risk or currency risk), whether those changes
are caused by factors specific to the individual financial instrument or its
issuer, or factors affecting similar financial instruments traded in the
market. Local, regional or global events such as war, acts of terrorism, the
spread of infectious illness or other public health issue, recessions, climate
change or other events could have a significant impact on the Company and its
investments.
Valuation of financial instruments
Financial assets and financial liabilities are either carried in the Statement
of Financial Position at their fair value (investments and derivatives) or at
an amount which is a reasonable approximation of fair value (due from brokers,
dividends and interest receivable, due to brokers, accruals, cash at bank and
bank overdrafts). IFRS 13 requires the Company to classify fair value
measurements using a fair value hierarchy that reflects the significance of
inputs used in making the measurements. The valuation techniques used by the
Company are explained in the accounting policies note 2(g) as set out on pages
96 and 97 in the Company’s Annual Report and Financial Statements for the
year ended 30 November 2021.
Categorisation within the hierarchy has been determined on the basis of the
lowest level input that is significant to the fair value measurement of the
relevant asset.
The fair value hierarchy has the following levels:
Level 1 – Quoted market price for identical instruments in active markets
A financial instrument is regarded as quoted in an active market if quoted
prices are readily available from an exchange, dealer, broker, industry group,
pricing service or regulatory agency and those prices represent actual and
regularly occurring market transactions on an arm’s length basis. The
Company does not adjust the quoted price for these instruments.
Level 2 – Valuation techniques using observable inputs
This category includes instruments valued using quoted prices for similar
instruments in markets that are considered less active, or other valuation
techniques where all significant inputs are directly or indirectly observable
from market data.
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 long and short derivative positions were valued using
the underlying equity bid price (offer price in respect of short positions)
and the contract price at the inception of the 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.
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.
Level 3 – Valuation techniques using significant unobservable inputs
This category includes all instruments where the valuation technique includes
inputs not based on market data and these inputs could have a significant
impact on the instrument’s valuation.
This category also includes instruments that are valued based on quoted prices
for similar instruments where significant entity determined adjustments or
assumptions are required to reflect differences between the instruments and
instruments for which there is no active market. The Investment Manager
considers observable data to be that market data that is readily available,
regularly distributed or updated, reliable and verifiable, not proprietary and
provided by independent sources that are actively involved in the relevant
market.
The level in the fair value hierarchy within which the fair value measurement
is categorised in its entirety is determined on the basis of the lowest level
input that is significant to the fair value measurement.
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.
Fair values of financial assets and financial liabilities
The table below sets out fair value measurements using the IFRS 13 fair value
hierarchy.
Financial assets/(liabilities) at fair value through profit or loss at 31 May 2022 (unaudited) Level 1 £’000 Level 2 £’000 Level 3 £’000 Total £’000
Assets:
Equity investments 623,283 – – 623,283
Contracts for difference (fair value) – 10,056 – 10,056
Liabilities:
Contracts for difference (fair value) – (1,573) – (1,573)
Futures (fair value) (562) – – (562)
-------------- -------------- -------------- --------------
622,721 8,483 – 631,204
======== ======== ======== ========
Financial assets/(liabilities) at fair value through profit or loss at 31 May 2021 (unaudited) Level 1 £’000 Level 2 £’000 Level 3 £’000 Total £’000
Assets:
Equity investments 809,636 – – 809,636
Contracts for difference (fair value) – 3,632 – 3,632
Liabilities:
Contracts for difference (fair value) – (153) – (153)
-------------- -------------- -------------- --------------
809,636 3,479 – 813,115
======== ======== ======== ========
Financial assets/(liabilities) at fair value through profit or loss at 30 November 2021 (audited) Level 1 £’000 Level 2 £’000 Level 3 £’000 Total £’000
Assets:
Equity investments 921,204 – – 921,204
Contracts for difference (fair value) – – – –
Liabilities:
Contracts for difference (fair value) – (8,716) – (8,716)
-------------- -------------- -------------- --------------
921,204 (8,716) – 912,488
======== ======== ======== ========
There were no transfers between levels for financial assets and financial
liabilities during the period recorded at fair value as at 31 May 2022 and 31
May 2021 or the year ended 30 November 2021. The Company did not hold any
Level 3 securities during the period ended 31 May 2022.
For exchange listed equity investments the quoted price is the bid price.
Substantially all investments are valued based on unadjusted quoted market
prices. Where such quoted prices are readily available in an active market,
such prices are not required to be assessed or adjusted for any price related
risks, including climate risk, in accordance with the fair value related
requirements of the Company’s Financial Reporting Framework.
11. TRANSACTIONS WITH THE INVESTMENT MANAGER AND AIFM
BlackRock Fund Managers Limited (BFM) provides management and administration
services to the Company under a contract which is terminable on six months’
notice. BFM has (with the Company’s consent) delegated certain portfolio and
risk management services, and other ancillary services, to BlackRock
Investment Management (UK) Limited (BIM (UK)). Further details of the
investment management contract are disclosed on pages 56 and 57 of the
Directors’ Report in the Company’s Annual Report and Financial Statements
for the year ended 30 November 2021.
The investment management fee due for the six months ended 31 May 2022
amounted to £1,753,000 (six months ended 31 May 2021: £1,597,000; year ended
30 November 2021: £3,652,000). In addition, a performance fee of £nil (six
months ended 31 May 2021: £5,917,000; year ended 30 November 2021:
£6,655,000) was accrued for the six months ended 31 May 2022.
At the period end, £1,753,000 was outstanding in respect of management fees
(31 May 2021: £2,183,000; 30 November 2021: £2,923,000). Any final
performance fee for the full year ending 30 November 2022 will not crystallise
and fall due until the calculation date of 30 November 2022.
In addition to the above services, BlackRock has provided the Company with
marketing services. The total fees paid or payable for these services to 31
May 2022 amounted to £66,000 excluding VAT (six months ended 31 May 2021:
£72,000; year ended 30 November 2021: £157,000). Marketing fees of £186,000
excluding VAT (31 May 2021: £203,000; 30 November 2021: £120,000) were
outstanding at 31 May 2022.
The Company has an investment in BlackRock Institutional Cash Series plc -
Sterling Liquid Environmentally Aware Fund of £67,645,000 as at 31 May 2022
(31 May 2021: £25,697,000; 30 November 2021: £25,080,000).
As at 31 May 2022, an amount of £83,000 (31 May 2021: £155,000; 30 November
2021: £78,000) was payable to the Manager in respect of Directors’ fees.
The ultimate holding company of the Manager and the Investment Manager is
BlackRock, Inc., a company incorporated in Delaware, USA.
12. RELATED PARTY DISCLOSURE
Directors’ emoluments
The Board consists of six non-executive Directors, all of whom are considered
to be independent of the Manager by the Board. None of the Directors has a
service contract with the Company. With effect from 1 December 2021, the
Chairman receives an annual fee of £44,000, the Chairman of the Audit
Committee receives an annual fee of £35,000 and each of the other Directors
receives an annual fee of £30,000.
As at 31 May 2022, an amount of £16,500 (31 May 2021: £15,000; 30 November
2021: £15,000) was outstanding in respect of Directors’ fees.
At the period end, members of the Board, including any connected persons, held
ordinary shares in the Company as set out below:
Ordinary shares 31 May 2022 Ordinary shares 30 November 2021
Christopher Samuel (Chairman) 64,019 63,352
Loudon Greenlees 15,000 15,000
Nigel Burton 16,167 16,000
Angela Lane 11,602 11,496
Louise Nash 3,900 2,100
Merryn Somerset Webb 3,727 3,727
13. CONTINGENT LIABILITIES
There were no contingent liabilities as at 31 May 2022 (31 May 2021 and 30
November 2021: nil).
14. PUBLICATION OF NON STATUROTY 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 2022 and
31 May 2021 has not been audited.
The information for the year ended 30 November 2021 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.
15. ANNUAL RESULTS
The Board expects to announce the annual results for the year ending 30
November 2022 in February 2023. Copies of the results announcement can be
obtained from the Secretary on 020 7743 3000 or by email at
cosec@blackrock.com. The Annual Report and Financial Statements should be
available by the beginning of February 2023, with the Annual General Meeting
expected to be held in March 2023.
FOR FURTHER INFORMATION, PLEASE CONTACT:
Melissa Gallagher, Managing Director, Closed End Funds, BlackRock Investment
Management (UK) Limited
Tel: 020 7743 3000
Press Enquiries:
Ed Hooper, Lansons Communications – Tel: 0207 294 3620
E-mail: edh@lansons.com; BlackRockInvestmentTrusts@lansons.com
20 July 2022
12 Throgmorton Avenue
London EC2N 2DL
END
The Half Yearly Financial Report will also be available on the BlackRock
website at http://www.blackrock.com/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.
Should you wish to receive investment trust related news and insights you can
subscribe to BlackRock’s Investment Trust Matters newsletter at:
https://go.blackrock.com/LP=2142.
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