REG-BlackRock Income and Growth Investment Trust Plc: Half-year Report
20/06/2024 16:30
BlackRock Income and Growth Investment Trust plc
LEI: 5493003YBY59H9EJLJ16
Half Yearly Financial Report for the Six Months Ended 30 April 2024
Performance record
As at As at
30 April 31 October
2024 2023
Net assets (£’000) 1 43,809 40,156
Net asset value per ordinary share (pence) 217.79 194.90
Ordinary share price (mid-market) (pence) 186.50 178.00
Discount to net asset value 2 14.4% 8.7%
FTSE All-Share Index 9611.01 8413.70
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For the six For the
months ended year ended
30 April 2024 31 October 2023
Performance (with dividends reinvested)
Net asset value per share 2 14.4% 5.2%
Ordinary share price 2 7.6% 8.1%
FTSE All-Share Index 14.2% 5.9%
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Performance since 1 April 2012 3 (with dividends reinvested)
Net asset value per share 2 130.0% 101.1%
Ordinary share price 2 118.9% 103.5%
FTSE All-Share Index 128.2% 99.8%
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For the six For the six Change
months ended months ended %
30 April 2024 30 April 2023
Revenue
Net profit on ordinary activities after taxation (£’000) 806 722 11.6
Revenue earnings per ordinary share (pence) 4 3.94 3.44 14.5
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Dividends (pence)
Interim 2.70 2.60 3.8
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1 The change in net assets reflects portfolio movements, the purchase of the
Company’s own shares and dividends paid.
2 Alternative Performance Measures, see Glossary within the Half Yearly
Financial Report.
3 Since BlackRock's appointment as Investment Manager on 1 April 2012.
4 Further details are given in the Glossary within the Half Yearly Financial
Report.
Chairman’s statement
Overview
I am pleased to report that our portfolio has performed well during the six
months to 30 April 2024, delivering strong absolute NAV returns, and
marginally outperforming the Benchmark Index, which also performed well as UK
equity markets rose.
Overall market sentiment was once again heavily influenced by the path of
inflation and interest rates. In the US, the anticipated easing of monetary
policy at the start of 2024 did not materialise as the Federal Reserve
grappled with the challenge of deteriorating growth and a possible recession,
while also seeking to quell stubborn price inflation. Following a shallow
technical recession in the second half of 2023, UK GDP returned to growth in
2024, although to date progress remains relatively muted. However, the
market was buoyed by declining inflation, attractive valuations, and the
prospect of a cut in interest rates in the summer.
Demand for UK equities appeared to improve during the period, with
investors’ interest in UK assets aided by a combination of attractive
valuations, relatively high yields and steadily reducing inflation. The rate
of inflation for the 12-months to May 2024 came in at 2.0%, the lowest level
since July 2021 and hitting the Bank of England’s inflation target.
Performance
The Company’s net asset value per share (NAV) returned 14.4%, compared with
the Company’s Benchmark Index, the FTSE All-Share Index (total return),
which returned 14.2%. The Company’s share price returned 7.6% as the
discount widened from 8.7% at the start of the period to 14.4% as at 30 April
2024. (All percentages in Pound Sterling with dividends reinvested).
Subsequent to the period end and as at 19 June 2024, the net asset value per
share of the Company has increased by 2.2% from 217.79 pence per share to
222.59 pence per share and the Company’s share price has risen by 6.4% from
186.50 pence per share to 198.50 pence per share. By comparison, the
Company’s Benchmark Index has increased by 1.6% over the same period.
Further information on the significant components of overall performance and
the changes to portfolio composition are set out in the Investment Manager’s
report below.
Revenue profit and dividends
Revenue profit for the period was 3.94 pence per share (six months to 30 April
2023: 3.44 pence per share), a year on year increase of 14.5%. The Board is
declaring an increased interim dividend of 2.70 pence per share which will be
paid on 3 September 2024 to shareholders on the Company’s register at the
close of business on 26 July 2024 (the ex-dividend date is 25 July 2024). I am
pleased to report that our interim dividend is fully covered by the revenue
generated during the six-month period to 30 April 2024.
Share capital
The Directors recognise the importance to investors that the Company’s share
price should not trade at a significant discount to NAV, and therefore, in
normal market conditions, looks to use the Company’s share buy back, sale of
shares from treasury and share issuance powers to seek to ensure that the
share price does not differ excessively from the underlying NAV. We used our
powers to buy back almost half a million shares during the period, despite
which the discount proved stubborn, having traded at an average level of 12.7%
throughout and ending the period at 14.4%. Following the end of the period, at
the close of business on 19 June 2024 the discount was 10.8%.
A total of 488,228 ordinary shares were bought back and cancelled during the
period at an average price of 181.68 pence and for a total consideration of
£887,000.
Fees and charges
The Board is mindful of the need to ensure that shareholders receive good
value from the Company and regularly reviews its costs and charges. Following
the discussion below, effective from 1 November 2023, the Company is entitled
to a rebate from the investment management fee charged by the Manager in the
event the Company’s ongoing charges exceed 1.15% per annum of average daily
net assets. Further information is set out within the Half Yearly Financial
Report.
Gearing
The Company operates a flexible gearing policy which depends on prevailing
conditions and the outlook for the market. Gearing is subject to a maximum
level of 20% of net assets at the time of investment. As at 30 April 2024 the
Company had net gearing of 5.5%. Gearing levels and sources of funding are
reviewed regularly to ensure that the Company has access to the most
competitive borrowing rates available to it. The Company has a one-year
unsecured Sterling Revolving Credit Facility of £8,000,000 with The Bank of
New York Mellon (International) Limited, of which £4,000,000 is currently
drawn.
Shareholder communication
The Board appreciates how important access to regular information is to our
shareholders. To supplement our Company website, we now offer shareholders the
ability to sign up to the Trust Matters newsletter which includes information
on the Company as well as news, views and insights.
Further information on how to sign up is included on the inside cover of the
Half Yearly Financial Report
Outlook
Following the period end, the Government’s announcement of an early General
Election took many by surprise. There has since been a great deal written on
the potential economic ramifications of an incumbent or opposition victory,
analysis of the respective monetary and fiscal policies, and the potential
impact on various sectors of the UK market. What we do know is that whichever
political party is elected, the resulting political certainty should be
broadly positive for UK equities.
As you will read in their report which follows below, your portfolio managers
believe the UK stock market continues to offer an attractive value, both in
absolute terms and relative to other developed markets. They are excited about
the opportunities available and have added several new positions in both
domestic large-cap and mid-cap companies during the period. With UK equity
valuations at historical lows, and with an improving macroeconomic backdrop
providing a more fertile environment for growth, they believe the outlook for
the remainder of the year and beyond is positive.
Your Board remains fully supportive of our portfolio managers’ investment
philosophy. Their consistent investment approach focuses on identifying
high-quality, well-capitalised, cash generative companies that can compound
returns over time. We trust they will continue to generate long term capital
growth and an attractive level of income for the Company’s shareholders.
GRAEME PROUDFOOT
Chairman
20 June 2024
Investment Manager’s report
Performance
For the six months to 30 April 2024, the Company’s NAV returned 14.4%,
performing broadly in-line with its benchmark, the FTSE All-Share Index (the
Benchmark Index), which returned 14.2% over the same period. (All percentages
are in Pound Sterling with dividends reinvested.)
Investment approach
In assembling the Company’s portfolio, we adopt a concentrated investment
approach to ensure that our best ideas contribute significantly to returns. We
believe that it is the role of the portfolio overall to generate an attractive
and growing yield alongside capital growth rather than every individual
company within the portfolio. This gives the Company increased flexibility to
invest where returns are most attractive. This approach results in a portfolio
which differs substantially from the index and in any individual year the
returns will vary, sometimes significantly from those of the index. Our
objective is to achieve returns greater than the index through time. The
foundation of the portfolio, approximately 70%, is in ’income generators’
that we believe will sustain strong cash generation and pay an attractive and
growing dividend whilst aiming to deliver a double-digit total return.
Additionally, we look to identify and invest 20% of the portfolio in
‘growth’ companies that have significant barriers to entry and scalable
business models that enable them to grow consistently. We also look for
turnaround companies, accounting for up to 10% of portfolio value, which
represent those companies that are out of favour with the market, facing
temporary challenges yet offer significant recovery potential.
Market overview
Despite the late euphoria of 2023, US interest rates have remained higher than
initially forecasted with policy makers faced with a challenging situation of
having to balance the risk of an impending recession with persistent high
levels of inflation. In the US, the Federal Reserve (Fed) held interest rates
steady as inflation remained sticky but assuaged market concerns towards the
end of the period as it signalled the intention to cut and revise up growth
and inflation forecasts. In the Eurozone, inflation eased but remained above
the European Central Bank’s (ECB) target of 2%. The ECB held interest rates
steady as policymakers balanced concerns over a looming recession with
persistently elevated underlying inflationary pressures.
The UK market showed resilience as signs of easing inflation, expectations of
early interest rate cuts by the Bank of England and attractive prices have
helped boost investor interest in UK equities. The FTSE 100 rose steadily over
the period, before reaching a record high of 8,147 points in April, buoyed by
the substantial exposure to mining and energy sectors which benefitted from
the strength in oil, copper, and precious metals. The health care and consumer
staples sectors, which are significant US Dollar earners, also contributed to
the UK market’s strong relative performance, aided by Pound Sterling's
weakness against the US currency. The strong performance also trickled down to
UK small and mid-caps, although not to the same extent as blue-chip stocks.
Contributors to and detractors from performance
The Company benefitted from its large position in 3i Group whose annual
results provided welcome news on both current trading and the future prospects
of its largest asset, Action, the European discount retailer. Like-for-like
growth continues to exceed expectations as customers benefit from reinvestment
in prices and as the group continues to open stores in existing and new
countries. With 2,566 stores in existence at the end of 2023 and potential to
open a further 4,000+ stores in Europe, we continue to see sustainable
like-for-like growth and growing returns to investors. Intermediate Capital
Group performed well during the period as returning risk appetite and
continued strong fund-raising led to a positive re-evaluation of its
prospects. Similarly, good execution of their strategy at Next led to strong
performance in the shares. Despite a fairly patchy backdrop for the UK
consumer, the investments Next has made in online capabilities, including its
Label platform serving third parties and in small brand acquisitions, are
paying dividends. The portfolio also benefitted from not owning Diageo or
Prudential as weaker trading in both saw the share prices fall.
The Company's holding in Reckitt performed poorly over the period. The
company’s results for 2023 were worse than expected: volume weakness was
compounded by a product recall and an understatement of trade spend in the
Middle East led to a further shortfall. The news flow deteriorated as the
quarter progressed with an adverse jury ruling in the US. The company has
staunchly defended its position and intends to appeal. However, we have seen
that litigation can create an overhang for many months and the shares are
likely to remain optically cheap whilst this remains. Similarly, Hays, the
staffing company, issued a profit warning following a deceleration in activity
in December with net fees falling c. 15% in December versus 7-8% in
September-November due to weakness in their permanent placements division
alongside a muted seasonal pick- up in temporary placements. The shares have
been derating for some time in anticipation of this downturn. Hays remains
cash generative and operates with a net cash balance sheet and we believe the
company should emerge in a strong competitive position when the macroeconomic
backdrop improves. We continue to own Hays as we see significant long-term
value. The Company's overweight position in Centrica also suffered as the
shares gave up some of the strong gains it made during the early part of 2023.
Not owning Rolls Royce was also a headwind given the shares saw very strong
performance during the period as fears of further capital raising were eased
by strong trading and cash generation.
Transactions
The Company purchased a new holding in Weir Group. This is a mining equipment
supplier with a well-established installed base which generates significant
aftermarket revenue and profit. The outlook for mining capex looks reasonable,
especially in their key commodities (copper, gold, iron ore) which should
allow original equipment orders to improve from a low base. Offering
attractive free-cash-flow generation with a robust balance sheet and modest
valuation, we perceive a very attractive risk reward.
We also started a new position in SGS. This is a global testing business with
a new and well-regarded CEO. We would expect the new CEO to reinvigorate the
organic and inorganic prospects of the organisation and to improve operational
effectiveness. We view this as an attractive industry and company which have
both struggled, with the new CEO as a potential catalyst for a turnaround.
The Company increased its positions in both NatWest and HSBC as we expect the
outlook for earnings and returns to continue to positively surprise. We also
took part in the placing at Segro to enable it to execute on its exciting
growth prospects.
To fund these purchases the Company sold its positions in Schneider Electric
and Centrica. Schneider Electric has been a hugely successful holding for the
portfolio since purchase. With the shares up 35% in 2023 and with recent
expectations raised again, we felt the risk-reward was now more balanced with
better opportunities elsewhere. Centrica has performed strongly since its
purchase in 2021 and again we have higher conviction elsewhere following its
+c. 80% move.
Our investment case for Watches of Switzerland has been impacted by several
factors including the weaker-than-expected demand recovery in China along with
the Rolex acquisition of Bucherer. At this point, we believe there are more
questions than answers for the company, therefore, we have decided to exit the
position.
Reckitt was reduced following the emergence of potential litigation:
Unfortunately, this development is an overhang that is likely to persist for
some time and we moderated our position to manage this expected dynamic. We
also reduced our position in 3i Group and Shell, following the strong run in
the shares.
Gearing
Historically, we have managed the Company with a modest and consistent level
of gearing, typically between 5-8% to enhance income generation and capital
growth. However, as market volatility has picked up, we have been more active
over the last 2 years, varying both the level of gearing and using a broader
range (0-10%) depending on the opportunities or risks presenting themselves at
the time. As at 30 April 2024, the Company had employed net gearing of 5.5%.
Outlook
Equity markets entered 2024 in a buoyant mood following a strong and broad
rally in the latter part of 2023. The outlook, and optimism, is a far cry from
12 months ago, when supply chains were hugely disrupted, and inflation was in
double digits and well ahead of central banks’ targets prompting rapid and
substantial interest rates hikes despite an uncertain demand environment.
Despite this, equities had one of their best years on record outperforming
bonds with double digit increases, in US Dollar terms, across most of the
developed world and some emerging markets. In the US, the Nasdaq was the
standout rising 54% driven by the largest seven companies that rebounded
strongly (+c. 70%) after a poor 2022, when they had fallen 39% as a group. The
FTSE All-Share Index returned 7.9% in 2023. Whilst China was the surprise
negative in 2023, with no noticeable COVID-19 re-opening recovery and
lacklustre growth despite government attempts to stimulate.
As we pass the first quarter of 2024, we believe markets have shifted into
‘goldilocks’ territory whereby slowing inflation has signalled the peak
for interest rates while broad macroeconomic indicators that have been weak
are not expected to deteriorate further. This is also helpful for the cost and
availability of credit which has recently improved having been deteriorating
through most of 2023. During December, bond markets had begun to price in
130bps of easing in the US and a not dissimilar amount in the UK and Europe.
We believed that this quantum of cuts will prove to be overly aggressive
without a significant deterioration in the economy which we don’t expect.
That said, despite these expectations moderating significantly during Q1,
stock markets have continued to make progress in the developed world. Labour
markets remain resilient for now with low levels of unemployment while real
wage growth is supportive of consumer demand albeit presenting a challenge to
corporate profit margins.
Notably in 2024, geopolitics will play a more significant role in asset
markets. This year will see the biggest election year in history with more
than 60 countries representing over half of the world’s population going to
the polls. While most, such as the UK’s are unlikely to have globally
significant economic or geopolitical ramifications, others, such as the US
elections in November, could have a material impact. We believe political
certainty may be helpful for the UK and address the UK’s elevated risk
premium that has persisted since the damaging Autumn budget of 2022. Whilst we
do not position the portfolios for any particular election outcome, we are
mindful of the potential volatility and the opportunities that may result.
The UK stock market continues to remain depressed in valuation terms relative
to other developed markets offering double-digit discounts across a range of
valuation metrics. This valuation ‘anomaly’ saw further reactions from UK
corporates with the buyback yield of the UK, at the end of 2023, standing at a
respectable c. 2.5%. Combining this with a dividend yield of c. 3.7% (FTSE All
Share Index yield as at 30 April 2024. Source: The Investment Association) the
cash return of the UK market is attractive in absolute terms and comfortably
higher than other developed markets. Although we anticipate further volatility
ahead as earnings estimates moderate, we know that in the course of time risk
appetite will return and opportunities are emerging. We have identified a
number of opportunities with new positions initiated throughout the year in
both UK domestic and midcap companies.
We continue to focus the portfolio on cash generative businesses with durable,
competitive advantages as we believe these companies are best placed to drive
returns over the long-term. Whilst we anticipate economic and market
volatility will persist throughout the year, we are excited by the
opportunities this will likely create; by identifying the companies that
strengthen their long-term prospects as well as attractive turnaround
situations.
Adam Avigdori and David Goldman
BlackRock Investment Management (UK) Limited
20 June 2024
Ten largest investments
Together, the Company’s ten largest investments represented 46.6% of the
Company’s portfolio as at 30 April 2024 (31 October 2023: 48.0%)
1 ▲ AstraZeneca (2023: 2nd)
Sector: Pharmaceuticals & Biotechnology
Market value: £3,670,000
Share of investments: 7.9% (2023: 7.2%)
AstraZeneca is an Anglo-Swedish multinational pharmaceutical group with its
headquarters in the UK. It is a science-led biopharmaceutical business with a
portfolio of products for major disease areas including cancer, cardiovascular
infection, neuroscience and respiration.
2 ▼ Shell (2023: 1st)
Sector: Oil & Gas Producers
Market value: £3,566,000
Share of investments: 7.7% (2023: 8.9%)
Shell is a global oil and gas company. The company operates in both upstream
and downstream industries. The upstream division is engaged in searching for
and recovering crude oil and natural gas, the liquefaction and transportation
of gas. The downstream division is engaged in manufacturing, distribution and
marketing activities for oil products and chemicals.
3 ▲ RELX (2023: 4th)
Sector: Media
Market value: £2,470,000
Share of investments: 5.3% (2023: 5.5%)
RELX is a global provider of professional information solutions that includes
publication of scientific, medical, technical and legal journals. It also has
the world’s leading exhibitions, conference and events business.
4 ▼ Rio Tinto (2023: 3rd)
Sector: Mining
Market value: £2,281,000
Share of investments: 4.9% (2023: 5.9%)
Rio Tinto is a metals and mining group operating in approximately 36 countries
around the world, producing iron ore, copper, diamonds, gold and uranium.
5 ▲ 3i Group (2023: 6th)
Sector: Financial Services
Market value: £2,222,000
Share of investments: 4.8% (2023: 4.2%)
3i Group is a leading international investor focused on mid-market private
equity and infrastructure.
6 ▲ HSBC (2023: 15th)
Sector: Banks
Market value: £2,010,000
Share of investments: 4.3% (2023: 2.2%)
HSBC, a bank and financial services institution, has a multinational footprint
with a meaningful presence in Asia. It operates through retail banking and
wealth management, commercial banking, global banking and markets, and global
private banking businesses.
7 ► Unilever (2023: 7th)
Sector: Personal Goods
Market value: £1,475,000
Share of investments: 3.2% (2023: 3.5%)
Unilever is a consumer staples business operating in food, home and personal
care and has strong positions in emerging markets, where long-term growth
trends in various countries that currently generate the majority of revenues.
8 ▲ Tate & Lyle (2023: 11th)
Sector: Food Producers
Market value: £1,393,000
Share of investments: 3.0% (2023: 2.5%)
Tate & Lyle is a British-headquartered, global supplier of food and beverage
products to food and industrial markets.
9 ▲ Segro (2023: 21st)
Sector: Real Estate Investment Trusts
Market value: £1,282,000
Share of investments: 2.8% (2023: 1.8%)
Segro is an industrial real estate investment trust with a high-quality
portfolio of assets.
10 ▼ Reckitt (2023: 5th)
Sector: Household Goods & Home Construction
Market value: £1,271,000
Share of investments: 2.7% (2023: 4.7%)
Reckitt is a global leader in consumer health, hygiene and household products.
Its products are sold in 200 countries and its 19 most profitable brands are
responsible for the majority of net revenues.
All percentages reflect the value of the holding as a percentage of total
investments.
Percentages in brackets represent the value of the holding as at 31 October
2023.
Distribution of investments as at 30 April 2024
Analysis of portfolio by sector
% of investments by market value Benchmark
Index
Financial Services 10.6 4.8
Banks 10.6 9.9
Pharmaceuticals & Biotechnology 9.4 11.4
Oil & Gas Producers 9.3 11.6
Support Services 8.5 3.4
Media 6.8 3.9
Mining 6.3 0.3
Household Goods & Home Construction 6.0 1.2
General Retailers 4.4 3.1
Real Estate Investment Trusts 4.0 2.5
Non-Life Insurance 3.5 0.9
Travel & Leisure 3.4 3.2
Personal Goods 3.2 0.2
Food Producers 3.0 0.7
Industrial Engineering 2.7 0.6
Life Insurance 2.4 2.1
Tobacco 1.7 2.6
Electronic & Electrical Equipment 1.6 1.0
Health Care Equipment & Services 1.4 0.5
Leisure Goods 1.1 0.2
General Industrials 0.1 1.6
Sources: BlackRock and Datastream.
Investment size
Number of investments % of investments by market value
<£1m 29 40.7
£1m to £2m 9 24.4
£2m to £3m 4 19.3
£3m to £4m 2 15.6
Source: BlackRock.
Investments as at 30 April 2024
Market % of
value investments
£’000
Financial Services
3i Group 2,222 4.8
London Stock Exchange Group 941 2.0
Intermediate Capital Group 820 1.8
Ashmore Group 567 1.2
Premier Asset Management Group 383 0.8
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4,933 10.6
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Banks
HSBC 2,010 4.3
Standard Chartered 1,147 2.5
NatWest 959 2.1
Lloyds Banking Group 791 1.7
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4,907 10.6
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Pharmaceuticals & Biotechnology
AstraZeneca 3,670 7.9
GSK 712 1.5
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4,382 9.4
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Oil & Gas Producers
Shell 3,566 7.7
BP Group 747 1.6
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4,313 9.3
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Support Services
Mastercard 1 1,261 2.7
Hays 1,138 2.5
Rentokil Initial 844 1.8
SGS 1 671 1.5
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3,914 8.5
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Media
RELX 2,470 5.3
Pearson 718 1.5
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3,188 6.8
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Mining
Rio Tinto 2,281 4.9
Anglo American 627 1.4
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2,908 6.3
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Household Goods & Home Construction
Reckitt 1,271 2.7
Taylor Wimpey 803 1.7
Berkeley Group 758 1.6
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2,832 6.0
========= =========
General Retailers
Next 865 1.9
Howden Joinery 587 1.3
WH Smith 576 1.2
--------------- ---------------
2,028 4.4
========= =========
Real Estate Investment Trusts
Segro 1,282 2.8
Big Yellow Group 533 1.2
--------------- ---------------
1,815 4.0
========= =========
Non-Life Insurance
Admiral Group 824 1.8
Hiscox 765 1.7
--------------- ---------------
1,589 3.5
========= =========
Travel & Leisure
Compass Group 1,185 2.6
Fuller Smith & Turner – A Shares 363 0.8
Patisserie Holdings 2 – –
--------------- ---------------
1,548 3.4
========= =========
Personal Goods
Unilever 1,475 3.2
--------------- ---------------
1,475 3.2
========= =========
Food Producers
Tate & Lyle 1,393 3.0
1,393 3.0
========= =========
Industrial Engineering
Weir Group 771 1.7
Spirax-Sarco Engineering 469 1.0
--------------- ---------------
1,240 2.7
========= =========
Life Insurance
Phoenix Group 1,100 2.4
--------------- ---------------
1,100 2.4
========= =========
Tobacco
British American Tobacco 778 1.7
--------------- ---------------
778 1.7
========= =========
Electronic & Electrical Equipment
Oxford Instruments 721 1.6
--------------- ---------------
721 1.6
========= =========
Health Care Equipment & Services
Smith & Nephew 638 1.4
--------------- ---------------
638 1.4
========= =========
Leisure Goods
Games Workshop 495 1.1
--------------- ---------------
495 1.1
========= =========
General Industrials
Coats Group 29 0.1
--------------- ---------------
29 0.1
========= =========
Total investments 46,226 100.0
========= =========
1 Non-UK listed investments.
2 Company under liquidation.
All investments are in ordinary shares unless otherwise stated. The total
number of investments held at 30 April 2024 was 44 (31 October 2023: 46).
As at 30 April 2024, the Company did not hold any equity interests comprising
more than 3% of any company’s share capital.
Interim Management Report and Responsibility Statement
The Chairman’s Statement and the Investment Manager’s Report above give
details of the important events which have occurred during the period and
their impact on the financial statements.
Principal risks and uncertainties
The principal risks faced by the Company can be divided into various areas as
follows:
· Investment performance;
· Income/dividend;
· Gearing;
· Legal & regulatory compliance;
· Operational;
· Political;
· Market; and
· Financial.
The Board reported on the principal risks and uncertainties faced by the
Company in the Annual Report and Financial Statements for the year ended 31
October 2023. A detailed explanation can be found in the Strategic Report on
pages 35 to 38 and in note 16 on pages 97 to 103 of the Annual Report and
Financial Statements which are available on the website maintained by
BlackRock at: www.blackrock.com/uk/brig.
Certain financial markets have been negatively impacted by the ongoing
geopolitical tensions arising from the hostilities in the Middle East and
Russia’s invasion of Ukraine and the impact of the subsequent range of
sanctions, regulations and other measures which impaired normal trading in
Russian securities. The Board and the Investment Manager continue to monitor
investment performance in line with the Company’s investment objectives, and
the operations of the Company and the publication of net asset values are
continuing.
In the view of the Board, other than those matters noted above, there have not
been any material changes to the fundamental nature of these risks since the
previous report and these principal risks and uncertainties, as summarised,
are as applicable to the remaining six months of the financial year as they
were to the six months under review.
Going concern
The Board remains mindful of the ongoing uncertainty surrounding the extent of
the hostilities in the Middle East and the potential duration of the war in
Ukraine and its longer-term effects on the global economy and the current
heightened geopolitical risk. Nevertheless, the Directors, having considered
the nature and liquidity of the portfolio, the Company’s investment
objective and the Company’s projected income and expenditure, are satisfied
that the Company has adequate resources to continue in operational existence
for the foreseeable future and is financially sound.
For this reason, they continue to adopt the going concern basis in preparing
the financial statements. The Company has a portfolio of investments which are
considered to be readily realisable and is able to meet all of its liabilities
from its assets and income generated from these assets. Ongoing charges
(calculated as a percentage of average daily net assets and based on the
management fee and all other operating expenses, excluding finance costs,
direct transaction costs, custody transaction charges, VAT recovered,
taxation, prior year expenses written back and certain non-recurring items)
for the year ended 31 October 2023 were approximately 1.28%. Effective 1
November 2023 the ongoing charges of the Company are capped at the rate of
1.15% per annum of average daily net assets.
Related party disclosure and transactions with the Manager
BlackRock Fund Managers Limited (BFM) was appointed as the Company’s
Alternative Investment Fund Manager (AIFM) with effect from 2 July 2014. BFM
has, with the Company’s consent, delegated certain portfolio and risk
management services, and other ancillary services, to BlackRock Investment
Management (UK) Limited (BIM (UK)). Both BFM and BIM (UK) are regarded as
related parties under the Listing Rules. Effective from 1 November 2023, the
Company is entitled to a rebate from the investment management fee charged by
the Manager in the event the Company’s ongoing charges exceed the cap of
1.15% per annum of average daily net assets. Details of the management fee
payable are set out in note 3 and note 12 below. The related party
transactions with the Directors are set out in note 11 below.
Directors’ responsibility statement
The Disclosure Guidance and Transparency Rules of the UK Listing Authority
require the Directors to confirm their responsibilities in relation to the
preparation and publication of the Interim Management Report and Financial
Statements.
The Directors confirm to the best of their knowledge that:
· the condensed set of financial statements contained within the Half Yearly
Financial Report has been prepared in accordance with the applicable UK
Accounting Standard FRS 104 ‘Interim Financial Reporting’; and
· the Interim Management Report, together with the Chairman’s Statement
and Investment Manager’s Report, include a fair review of the information
required by 4.2.7R and 4.2.8R of the FCA’s Disclosure Guidance and
Transparency Rules.
The Half Yearly Financial Report has not been audited or reviewed by the
Company’s Auditors.
The Half Yearly Financial Report was approved by the Board on 20 June 2024 and
the above responsibility statement was signed on its behalf by the Chairman.
GRAEME PROUDFOOT
For and on behalf of the Board
20 June 2024
Income statement for the six months ended 30 April 2024
Six months ended Six months ended Year ended
30 April 2024 30 April 2023 31 October 2023
(unaudited) (unaudited) (audited)
Notes Revenue Capital Total Revenue Capital Total Revenue Capital Total
£’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000
Gains on investments held at fair value through profit or loss – 4,892 4,892 – 5,340 5,340 – 1,119 1,119
(Losses)/gains on foreign exchange – (3) (3) – 5 5 – 2 2
Income from investments held at fair value through profit or loss 2 971 – 971 900 – 900 1,723 7 1,730
Other income 2 39 – 39 42 – 42 81 – 81
--------------- --------------- --------------- --------------- --------------- --------------- --------------- --------------- ---------------
Total income 1,010 4,889 5,899 942 5,345 6,287 1,804 1,128 2,932
========= ========= ========= ========= ========= ========= ========= ========= =========
Expenses
Investment management fee 3 (8) (74) (82) (30) (89) (119) (59) (176) (235)
Other operating expenses 4 (160) (3) (163) (161) (2) (163) (317) (6) (323)
--------------- --------------- --------------- --------------- --------------- --------------- --------------- --------------- ---------------
Total operating expenses (168) (77) (245) (191) (91) (282) (376) (182) (558)
========= ========= ========= ========= ========= ========= ========= ========= =========
Net profit on ordinary activities before finance costs and taxation 842 4,812 5,654 751 5,254 6,005 1,428 946 2,374
Finance costs (31) (94) (125) (23) (70) (93) (54) (163) (217)
--------------- --------------- --------------- --------------- --------------- --------------- --------------- --------------- ---------------
Net profit on ordinary activities before taxation 811 4,718 5,529 728 5,184 5,912 1,374 783 2,157
Taxation charge (5) – (5) (6) – (6) (7) – (7)
--------------- --------------- --------------- --------------- --------------- --------------- --------------- --------------- ---------------
Net profit on ordinary activities after taxation 6 806 4,718 5,524 722 5,184 5,906 1,367 783 2,150
Earnings per ordinary share (pence) 6 3.94 23.09 27.03 3.44 24.67 28.11 6.54 3.75 10.29
========= ========= ========= ========= ========= ========= ========= ========= =========
The total columns of this statement represent the Company’s profit and loss
account. The supplementary revenue and capital accounts are both prepared
under guidance published by the Association of Investment Companies (AIC). All
items in the above statement derive from continuing operations. No operations
were acquired or discontinued during the period. All income is attributable to
the equity holders of the Company.
The net profit on ordinary activities for the period disclosed above
represents the Company’s total comprehensive income.
Statement of changes in equity for the six months ended 30 April 2024
Note Called Share Capital Capital Special Revenue Total
up share premium redemption reserve reserve reserve £’000
capital account reserve £’000 £’000 £’000
£’000 £’000 £’000
For the six months ended 30 April 2024 (unaudited)
At 31 October 2023 307 14,819 242 10,266 12,391 2,131 40,156
Total comprehensive income:
Net profit for the period – – – 4,718 – 806 5,524
Transactions with owners, recorded directly to equity:
Ordinary shares purchased for cancellation (5) – 5 – (881) – (881)
Share purchase costs – – – – (6) – (6)
Dividends paid 1 5 – – – – – (984) (984)
--------------- --------------- --------------- --------------- --------------- --------------- ---------------
At 30 April 2024 302 14,819 247 14,984 11,504 1,953 43,809
========= ========= ========= ========= ========= ========= =========
For the six months ended 30 April 2023 (unaudited)
At 31 October 2022 313 14,819 236 9,483 13,427 2,294 40,572
Total comprehensive income:
Net profit for the period – – – 5,184 – 722 5,906
Transactions with owners, recorded directly to equity:
Ordinary shares purchased for cancellation (2) – 2 – (401) – (401)
Share purchase costs – – – – (2) – (2)
Dividends paid 2 – – – – – (986) (986)
--------------- --------------- --------------- --------------- --------------- --------------- ---------------
At 30 April 2023 311 14,819 238 14,667 13,024 2,030 45,089
========= ========= ========= ========= ========= ========= =========
For the year ended 31 October 2023 (audited)
At 31 October 2022 313 14,819 236 9,483 13,427 2,294 40,572
Total comprehensive income:
Net profit for the year – – – 783 – 1,367 2,150
Transactions with owners, recorded directly to equity:
Ordinary shares purchased for cancellation (6) – 6 – (1,029) – (1,029)
Share purchase costs – – – – (7) – (7)
Dividends paid 3 – – – – – (1,530) (1,530)
--------------- --------------- --------------- --------------- --------------- --------------- ---------------
At 31 October 2023 307 14,819 242 10,266 12,391 2,131 40,156
========= ========= ========= ========= ========= ========= =========
1 Final dividend paid in respect of the year ended 31 October 2023 of 4.80p
per share, declared on 21 December 2023 and paid on 15 March 2024.
2 Final dividend paid in respect of the year ended 31 October 2022 of 4.70p
per share, declared on 2 February 2023 and paid on 15 March 2023.
3 Interim dividend paid in respect of the six months ended 30 April 2023 of
2.60p per share was declared on 21 June 2023 and paid on 1 September 2023.
Final dividend paid in respect of the year ended 31 October 2022 of 4.70p per
share was declared on 2 February 2023 and paid on 15 March 2023.
For information on the Company’s distributable reserves, please refer to
note 9 below
Balance sheet as at 30 April 2024
Notes 30 April 30 April 31 October
2024 2023 2023
(unaudited) (unaudited) (audited)
£’000 £’000 £’000
Non current assets
Investments held at fair value through profit or loss 10 46,226 47,486 43,267
--------------- --------------- ---------------
Current assets
Current tax asset 35 26 27
Debtors 391 373 133
Cash and cash equivalents 1,708 1,623 1,110
--------------- --------------- ---------------
Total current assets 2,134 2,022 1,270
========= ========= =========
Current liabilities
Bank loan (4,000) (4,000) (4,000)
Other creditors (551) (419) (381)
--------------- --------------- ---------------
Total current liabilities (4,551) (4,419) (4,381)
========= ========= =========
Net current liabilities (2,417) (2,397) (3,111)
Net assets 43,809 45,089 40,156
--------------- --------------- ---------------
Total equity
Called up share capital 8 302 311 307
Share premium account 14,819 14,819 14,819
Capital redemption reserve 247 238 242
Capital reserve 14,984 14,667 10,266
Special reserve 11,504 13,024 12,391
Revenue reserve 1,953 2,030 2,131
--------------- --------------- ---------------
Total shareholders’ funds 6 43,809 45,089 40,156
========= ========= =========
Net asset value per ordinary share (pence) 6 217.79 215.22 194.90
========= ========= =========
Statement of cash flows for the six months ended 30 April 2024
Six months Six months Year
ended ended ended
30 April 30 April 31 October
2024 2023 2023
(unaudited) (unaudited) (audited)
£’000 £’000 £’000
Operating activities
Net profit on ordinary activities before taxation 5,529 5,912 2,157
Add back finance costs 125 93 217
Gains on investments held at fair value through profit or loss (4,892) (5,340) (1,119)
Losses/(gains) on foreign exchange 3 (5) (2)
Special dividends allocated to capital – – (7)
Sale of investments held at fair value through profit or loss 8,260 7,070 11,482
Purchase of investments held at fair value through profit or loss (6,317) (7,124) (11,632)
(Increase)/decrease in debtors (239) (206) 22
Increase in other creditors 104 59 134
Taxation on investment income (13) (16) (18)
--------------- --------------- ---------------
Net cash generated from operating activities 2,560 443 1,234
========= ========= =========
Financing activities
Ordinary shares purchased for cancellation (844) (401) (1,029)
Share purchase costs paid (6) (2) (7)
Interest paid (125) (93) (217)
Dividends paid (984) (986) (1,530)
--------------- --------------- ---------------
Net cash used in financing activities (1,959) (1,482) (2,783)
========= ========= =========
Increase/(decrease) in cash and cash equivalents 601 (1,039) (1,549)
Cash and cash equivalents at the beginning of the year 1,110 2,657 2,657
Effect of foreign exchange rate changes (3) 5 2
--------------- --------------- ---------------
Cash and cash equivalents at end of the year 1,708 1,623 1,110
========= ========= =========
Comprised of:
Cash at bank 72 59 44
Cash Fund 1 1,636 1,564 1,066
--------------- --------------- ---------------
1,708 1,623 1,110
========= ========= =========
1 Cash Fund represents funds held on deposit with the BlackRock Institutional
Cash Series plc - Sterling Liquid Environmentally Aware Fund.
Notes to the financial statements for the six months ended 30 April 2024
1. Principal activity and basis of preparation
The principal activity of the Company is that of an investment trust company
within the meaning of Section 1158 of the Corporation Tax Act 2010.
The financial statements of the Company are prepared on a going concern basis
in accordance with Financial Reporting Standard 104 Interim Financial
Reporting (FRS 104) applicable in the United Kingdom and Republic of Ireland
and the revised Statement of Recommended Practice – ‘Financial Statements
of Investment Trust Companies and Venture Capital Trusts’ (SORP) issued by
the Association of Investment Companies (AIC) in October 2019 and updated in
July 2022, and the provisions of the Companies Act 2006.
The accounting policies and estimation techniques applied for the condensed
set of financial statements are as set out in the Company’s Annual Report
and Financial Statements for the year ended 31 October 2023.
2. Income
Six months Six months Year
ended ended ended
30 April 30 April 31 October
2024 2023 2023
(unaudited) (unaudited) (audited)
£’000 £’000 £’000
Investment income:
UK dividends 870 789 1,494
UK special dividends – – 27
UK property income distributions 40 8 19
Overseas dividends 61 103 183
--------------- --------------- ---------------
Total investment income 971 900 1,723
========= ========= =========
Other income:
Interest from Cash Fund 38 41 80
Deposit interest 1 1 1
--------------- --------------- ---------------
39 42 81
========= ========= =========
Total income 1,010 942 1,804
========= ========= =========
Dividends and interest received in cash during the year amounted to £777,000
and £37,000 respectively (six months ended 30 April 2023: £746,000 and
£43,000; year ended 31 October 2023: £1,789,000 and £83,000).
No special dividends have been recognised in capital (six months ended 30
April 2023: £nil; year ended 31 October 2023: £7,000).
3. Investment management fee
Six months ended Six months ended Year ended
30 April 2024 30 April 2023 31 October 2023
(unaudited) (unaudited) (audited)
Revenue Capital Total Revenue Capital Total Revenue Capital Total
£’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000
Investment management fee 28 83 111 30 89 119 59 176 235
Investment management fee rebate (20) (9) (29) – – – – – –
--------------- --------------- --------------- --------------- --------------- --------------- --------------- --------------- ---------------
Total 8 74 82 30 89 119 59 176 235
========= ========= ========= ========= ========= ========= ========= ========= =========
Under the terms of the investment management agreement, BFM is entitled to a
fee of 0.6% per annum of the Company’s quarter end market capitalisation.
The investment management fee is allocated 25% to the revenue account and 75%
to the capital account. There is no additional fee for company secretarial and
administration services.
In addition, effective from 1 November 2023, the Company is entitled to a
rebate from the investment management fee charged by the Manager in the event
the Company’s ongoing charges exceed the cap of 1.15% per annum of average
daily net assets. The amount of rebate accrued for the six months ended 30
April 2024 amounted to £29,000 (six months ended 30 April 2023: £nil; year
ended 31 October 2023: £nil). The rebate, if any, is offset against
management fees and is allocated between revenue and capital in the ratio of
total ongoing charges (as defined on pages 126 and 127 of the Annual Report
and Financial Statements for the year ended 31 October 2023) allocated between
revenue and capital during the period.
4. Other operating expenses
Six months Six months Year
ended ended ended
30 April 30 April 31 October
2024 2023 2023
(unaudited) (unaudited) (audited)
£’000 £’000 £’000
Allocated to revenue:
Custody fees – – 1
Depositary fees 2 2 5
Audit fees 1 18 15 29
Registrars’ fee 13 12 26
Directors’ emoluments 50 50 103
Marketing fees 7 7 14
Printing and postage fees 33 17 32
Legal and professional fees 21 34 56
London Stock Exchange fee 6 6 12
FCA fee 4 4 7
Prior year expenses written back 2 (10) (1) (3)
Other administration costs 16 15 35
--------------- --------------- ---------------
160 161 317
========= ========= =========
Allocated to capital:
Custody transaction costs 3 3 2 6
--------------- --------------- ---------------
163 163 323
========= ========= =========
1 No non-audit services were provided by the Company’s auditors in the six
months ended 30 April 2024 (six months ended 30 April 2023: none; year ended
31 October 2023: none).
2 Relates to printing and postage fees and other administration costs written
back in the six months ended 30 April 2024 (six months ended 30 April 2023:
other administration costs; year ended 31 October 2023: audit fees and other
administration costs).
3 For the six months ended 30 April 2024, expenses of £3,000 (six months
ended 30 April 2023: £2,000; year ended 31 October 2023: £6,000) were
charged to the capital account of the Income Statement. These relate to
transaction costs charged by the custodian on sale and purchase trades.
The transaction costs incurred on the acquisition of investments amounted to
£30,000 for the six months ended 30 April 2024 (six months ended 30 April
2023: £30,000; year ended 31 October 2023: £53,000). Costs relating to the
disposal of investments amounted to £4,000 for the six months ended 30 April
2024 (six months ended 30 April 2023: £3,000; year ended 31 October 2023:
£5,000). All transaction costs have been included within capital reserves.
5. Dividend
The Directors have declared an interim dividend of 2.70p per share for the
period ended 30 April 2024 payable on 3 September 2024 to shareholders on the
register on 26 July 2024. The total cost of the dividend based on 20,112,289
ordinary shares in issue at 12 June 2024 was £543,000 (30 April 2023:
£544,000).
In accordance with Section 32 of FRS 102, Events After the End of the
Reporting Period, the interim dividend payable on the ordinary shares has not
been included as a liability in the financial statements, as interim dividends
are only recognised when they have been paid.
6. Earnings and net asset value per ordinary share
Revenue, capital earnings and net asset value per ordinary share are shown
below and have been calculated using the following:
Six months Six months Year
ended ended ended
30 April 30 April 31 October
2024 2023 2023
(unaudited) (unaudited) (audited)
Net revenue profit attributable to ordinary shareholders (£’000) 806 722 1,367
Net capital profit attributable to ordinary shareholders (£’000) 4,718 5,184 783
--------------- --------------- ---------------
Total profit attributable to ordinary shareholders (£’000) 5,524 5,906 2,150
========= ========= =========
Total shareholders’ funds (£’000) 43,809 45,089 40,156
========= ========= =========
Earnings per share
The weighted average number of ordinary shares in issue during the period on which the earnings per ordinary share was calculated was: 20,433,281 21,008,269 20,913,124
The actual number of ordinary shares in issue at the period end on which the net asset value per ordinary share was calculated was: 20,115,258 20,949,796 20,603,486
--------------- --------------- ---------------
Calculated on weighted average number of ordinary shares:
Revenue earnings per share (pence) - basic and diluted 3.94 3.44 6.54
Capital earnings per share (pence) - basic and diluted 23.09 24.67 3.75
--------------- --------------- ---------------
Total earnings per share (pence) - basic and diluted 27.03 28.11 10.29
========= ========= =========
As at As at As at
30 April 30 April 31 October
2024 2023 2023
(unaudited) (unaudited) (audited)
Net asset value per ordinary share (pence) 217.79 215.22 194.90
Ordinary share price (mid-market) (pence) 186.50 191.00 178.00
========= ========= =========
There were no dilutive securities at 30 April 2024 (30 April 2023: none; 31
October 2023: none).
7. Reconciliation of liabilities arising from financing activities
Six months Six months Year ended
ended 30 April ended 30 April 31 October
2024 2023 2023
(unaudited) (unaudited) (audited)
Debt arising from financing activities
Debt arising from financing activities at beginning and end of the period/year 4,000 4,000 4,000
========= ========= =========
8. Called up share capital
Ordinary Treasury Total Nominal
shares shares shares value
number number number £’000
Allotted, called up and fully paid share capital comprised: Ordinary shares of 1 pence each:
At 31 October 2023 20,603,486 10,081,532 30,685,018 307
Shares purchased for cancellation (488,228) – (488,228) (5)
--------------- --------------- --------------- ---------------
At 30 April 2024 20,115,258 10,081,532 30,196,790 302
========= ========= ========= =========
In the six months ended 30 April 2024, 488,228 ordinary shares (six months
ended 30 April 2023: 222,118; year ended 31 October 2023: 568,428) were
purchased and subsequently cancelled for a total consideration including
expenses of £887,000 (six months ended 30 April 2023: £403,000; year ended
31 October 2023: £1,036,000).
Since the period end and up to 19 June 2024, a further 2,969 ordinary shares
have been bought back and cancelled for a total cost including expenses of
£6,000.
9. Reserves
The Company’s share premium account was cancelled pursuant to
shareholders’ approval of a special resolution at the Company’s Annual
General Meeting in 2002 and Court approval on 24 January 2002. The share
premium account which totalled £61,852,000 was transferred to a special
reserve. This action was taken, in part, to ensure that the Company had
sufficient distributable reserves.
The share premium account and capital redemption reserve are not distributable
reserves under the Companies Act 2006. In accordance with ICAEW Technical
Release 02/17BL on Guidance on Realised and Distributable Profits under the
Companies Act 2006, the special reserve and capital reserve may be used as
distributable reserves for all purposes and, in particular, the repurchase by
the Company of its ordinary shares and for payments such as dividends. In
accordance with the Company’s Articles of Association, the special reserve,
capital reserve and revenue reserve may be distributed by way of dividend. The
gain on the capital reserve arising on the revaluation of investments of
£7,035,000 (six months ended 30 April 2023: gain of £7,153,000; year ended
31 October 2023: gain of £2,793,000) is subject to fair value movements and
may not be readily realisable at short notice; as such it may not be entirely
distributable. The investments are subject to financial risks; as such the
capital reserve (arising on investments sold) and the revenue reserve may not
be entirely distributable if a loss occurred during the realisation of these
investments.
10. Financial risks and valuation of financial instruments
The Company’s investment activities expose it to the various types of risk
which are associated with the financial instruments and markets in which it
invests. The following information is not intended to be a comprehensive
summary of all risks and shareholders should refer to the Alternative
Investment Fund Managers’ Directive FUND 3.2.2R Disclosures which can be
found at www.blackrock.com/uk/brig for a more detailed discussion of the risks
inherent in investing in the Company.
Market risk arising from price risk
Price risk is the risk that the fair value or future cash flows of a financial
instrument will fluctuate because of changes in market prices (other than
those arising from interest rate risk or currency risk), whether those changes
are caused by factors specific to the individual financial instrument or its
issuer, or factors affecting similar financial instruments traded in the
market. Local, regional or global events such as war, acts of terrorism, the
spread of infectious illness or other public health issues, recessions,
climate change or other events could have a significant impact on the Company
and the market price of its investments and could result in increased premiums
or discounts to the Company’s net asset value.
Valuation of financial instruments
Financial assets and financial liabilities are either carried in the Balance
Sheet at their fair value (investments) or at an amount which is a reasonable
approximation of fair value (due from brokers, dividends and interest
receivable, due to brokers, accruals, cash and cash equivalents, bank
overdrafts and bank loans). Section 34 of FRS 102 requires the Company to
classify fair value measurements using a fair value hierarchy that reflects
the significance of inputs used in making the measurements. The valuation
techniques used by the Company are explained in the accounting policies note
on pages 88 and 89 of the Annual Report and Financial Statements for the year
ended 31 October 2023.
Categorisation within the hierarchy has been determined on the basis of the
lowest level input that is significant to the fair value measurement of the
relevant asset.
The fair value hierarchy has the following levels:
Level 1 - Quoted market price for identical instruments in active markets
A financial instrument is regarded as quoted in an active market if quoted
prices are readily available from an exchange, dealer, broker, industry group,
pricing service or regulatory agency and those prices represent actual and
regularly occurring market transactions on an arm’s length basis. The
Company does not adjust the quoted price for these instruments.
Level 2 - Valuation techniques using observable inputs
This category includes instruments valued using quoted prices for similar
instruments in markets that are considered less active, or other valuation
techniques where all significant inputs are directly or indirectly observable
from market data.
Level 3 - Valuation techniques using significant unobservable inputs
This category includes all instruments where the valuation technique includes
inputs not based on market data and these inputs could have a significant
impact on the instrument’s valuation.
This category also includes instruments that are valued based on quoted prices
for similar instruments where significant entity determined adjustments or
assumptions are required to reflect differences between the instruments and
instruments for which there is no active market. The Investment Manager
considers observable data to be that market data that is readily available,
regularly distributed or updated, reliable and verifiable, not proprietary and
provided by independent sources that are actively involved in the relevant
market.
The level in the fair value hierarchy within which the fair value measurement
is categorised in its entirety is determined on the basis of the lowest level
input that is significant to the fair value measurement. If a fair value
measurement uses observable inputs that require significant adjustment based
on unobservable inputs, that measurement is a Level 3 measurement.
Assessing the significance of a particular input to the fair value measurement
in its entirety requires judgement, considering factors specific to the asset
or liability, including an assessment of the relevant risks including but not
limited to credit risk, market risk, liquidity risk, business risk and
sustainability risk. The determination of what constitutes ‘observable’
inputs requires significant judgement by the Investment Manager and these
risks are adequately captured in the assumptions and inputs used in
measurement of Level 3 assets or liabilities.
Fair values of financial assets and financial liabilities
The table below is the analysis of the Company’s financial instruments
measured at fair value at the balance sheet date.
Financial assets at fair value through profit or loss Level 1 Level 2 Level 3 Total
£’000 £’000 £’000 £’000
Equity investments at 30 April 2024 (unaudited) 46,226 – – 46,226
Equity investments at 30 April 2023 (unaudited) 47,486 – – 47,486
Equity investments at 31 October 2023 (audited) 43,267 – – 43,267
========= ========= ========= =========
The Company held one Level 3 security during the six months ended 30 April
2024 (six months ended 30 April 2023: one; year ended 31 October 2023: one).
The investment in Patisserie Holdings has been valued at £nil as the company
is under liquidation.
There were no transfers between levels of financial assets and financial
liabilities recorded at fair value during the six months ended 30 April 2024,
six months ended 30 April 2023 and the year ended 31 October 2023.
For exchange listed equity investments, the quoted price is the bid price.
Substantially, all investments are valued based on unadjusted quoted market
prices. Where such quoted prices are readily available in an active market,
such prices are not required to be assessed or adjusted for any business risk,
including climate change risk, in accordance with the fair value related
requirements of the Company’s financial reporting framework.
11. Related party disclosure
Directors’ emoluments
The Board consists of three non-executive Directors, all of whom are
considered to be independent of the Manager by the Board. None of the
Directors has a service contract with the Company. With effect from 1 November
2023, the Chairman receives an annual fee of £32,750, the Audit Committee
Chairman receives an annual fee of £27,000 and each of the other Directors
receives an annual fee of £23,500.
At the period end and as at 20 June 2024 members of the Board held ordinary
shares in the Company as set out below:
Ordinary shares Ordinary shares Ordinary shares
20 June 2024 30 April 2024 31 October 2023
Graeme Proudfoot (Chairman) 60,000 60,000 60,000
Nicholas Gold 43,175 43,175 43,175
Charles Worsley 1 987,539 987,539 987,539
Win Robbins 2 N/a N/a 12,106
========= ========= =========
1 Including a non-beneficial interest of 655,500 ordinary shares.
2 Win Robbins retired as a Director of the Company on 7 March 2024.
Significant holdings
The following investors are:
a. funds managed by the BlackRock Group or are affiliates of BlackRock Inc.
(Related BlackRock Funds); or
b. investors (other than those listed in (a) above) who held more than 20% of
the voting shares in issue in the Company and are as a result, considered to
be related parties to the Company (Significant Investors).
Total % of shares Total % of shares Number of
held by Related held by Significant Investors Significant Investors
BlackRock Funds who are not affiliates of who are not affiliates of
BlackRock Group or BlackRock Group or
BlackRock, Inc. BlackRock, Inc.
As at 30 April 2024 nil n/a n/a
As at 31 October 2023 nil n/a n/a
As at 30 April 2023 nil n/a n/a
========= ========= =========
12. Transactions with the Investment Manager and AIFM
BlackRock Fund Managers Limited (BFM) provides management and administration
services to the Company under a contract which is terminable on six months’
notice. BFM has (with the Company’s consent) delegated certain portfolio and
risk management services, and other ancillary services, to BlackRock
Investment Management (UK) Limited (BIM (UK)). Further details of the
investment management contract are disclosed in the Directors’ Report on
page 47 in the Annual Report and Financial Statements for the year ended 31
October 2023.
The investment management fee is levied quarterly, based on 0.6% per annum of
the Company’s market capitalisation. The investment management fee due for
the six months ended 30 April 2024 amounted to £82,000 (six months ended 30
April 2023: £119,000; year ended 31 October 2023: £235,000). At the period
end, £227,000 was outstanding in respect of the investment management fee (30
April 2023: £119,000; 31 October 2023: £175,000). The Company is entitled to
a rebate from the investment management fee charged by the Manager in the
event the Company’s ongoing charges exceed the cap of 1.15% per annum of
average daily net assets. The rebate for the six months period ended 30 April
2024 amounted to £29,000 (six months ended 30 April 2023: £nil; year ended
31 October 2023: £nil) and has been adjusted against the investment
management fee charged by the Manager. Any final rebate for the full year
ending 31 October 2024 will not crystallise and fall due until the calculation
date of 31 October 2024.
In addition to the above services, BIM (UK) provided the Company with
marketing services. The total fees paid or payable for these services for the
six months ended 30 April 2024 amounted to £7,000 including VAT (six months
ended 30 April 2023: £7,000; year ended 31 October 2023: £14,000). At the
period end, £18,000 was outstanding in respect of marketing fees (30 April
2023: £18,000; 31 October 2023: £24,000).
The Company holds an investment in the BlackRock Institutional Cash Series plc
- Sterling Liquid Environmentally Aware Fund of £1,636,000 (30 April 2023:
£1,564,000; 31 October 2023: £1,066,000) which has been presented in the
financial statements as a cash equivalent. This is a fund managed by a company
within the BlackRock Group.
The ultimate holding company of the Manager and the Investment Manager is
BlackRock, Inc., a company incorporated in Delaware, USA.
13. Contingent liabilities
There were no contingent liabilities at 30 April 2024 (30 April 2023: none; 31
October 2023: none).
14. Publication of non statutory accounts
The financial information contained in this Half Yearly Financial Report does
not constitute statutory accounts as defined in Section 435 of the Companies
Act 2006. The financial information for the six months ended 30 April 2024 and
30 April 2023 has not been audited.
The information for the year ended 31 October 2023 has been extracted from the
latest published audited financial statements, which have been filed with the
Registrar of Companies. The report of the auditor on those accounts contained
no qualification or statement under Sections 498 (2) or (3) of the Companies
Act 2006.
15. Annual results
The Board expects to announce the annual results for the year ended 31 October
2024 in December 2024. Copies of the results announcement can be obtained from
the Secretary on 020 7743 3000 or by email at cosec@blackrock.com. The Annual
Report and Financial Statements should be available in December 2024, with the
Annual General Meeting being held in March 2025.
BlackRock Investment Management (UK) Limited
12 Throgmorton Avenue
London
EC2N 2DL
20 June 2024
ENDS
The Half Yearly Financial Report will also be available on the BlackRock
website at http://www.blackrock.com/uk/brig. Neither the contents of the
Manager’s website nor the contents of any website accessible from hyperlinks
on the Manager’s website (or any other website) is incorporated into, or
forms part of, this announcement.
For further information please contact:
Charles Kilner, Director, Closed End Funds – Tel: 020 7743 3000
Press enquires:
Ed Hooper, Lansons Communications
Tel: 020 7294 3620
E-mail: BlackRockInvestmentTrusts@lansons.com or EdH@lansons.com
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