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
30 April
2024
|
As at
31 October
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 value2
|
14.4%
|
8.7%
|
FTSE All-Share Index
|
9611.01
|
8413.70
|
|
=========
|
=========
|
|
For the six
months ended
30 April 2024
|
For the
year ended
31 October 2023
|
Performance (with dividends reinvested)
|
|
|
Net asset value per share2
|
14.4%
|
5.2%
|
Ordinary share price2
|
7.6%
|
8.1%
|
FTSE All-Share Index
|
14.2%
|
5.9%
|
|
---------------
|
---------------
|
Performance since 1 April 20123
(with dividends reinvested)
|
|
|
Net asset value per share2
|
130.0%
|
101.1%
|
Ordinary share price2
|
118.9%
|
103.5%
|
FTSE All-Share Index
|
128.2%
|
99.8%
|
|
=========
|
=========
|
|
For the six
months ended
30 April 2024
|
For the six
months ended
30 April 2023
|
Change
%
|
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
|
|
---------------
|
---------------
|
---------------
|
Dividends (pence)
|
|
|
|
Interim
|
2.70
|
2.60
|
3.8
|
|
=========
|
=========
|
=========
|
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
value
£’000
|
% of
investments
|
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
|
|
---------------
|
---------------
|
|
4,933
|
10.6
|
|
=========
|
=========
|
Banks
|
|
|
HSBC
|
2,010
|
4.3
|
Standard Chartered
|
1,147
|
2.5
|
NatWest
|
959
|
2.1
|
Lloyds Banking Group
|
791
|
1.7
|
|
---------------
|
---------------
|
|
4,907
|
10.6
|
|
=========
|
=========
|
Pharmaceuticals & Biotechnology
|
|
|
AstraZeneca
|
3,670
|
7.9
|
GSK
|
712
|
1.5
|
|
---------------
|
---------------
|
|
4,382
|
9.4
|
|
=========
|
=========
|
Oil & Gas Producers
|
|
|
Shell
|
3,566
|
7.7
|
BP Group
|
747
|
1.6
|
|
---------------
|
---------------
|
|
4,313
|
9.3
|
|
=========
|
=========
|
Support Services
|
|
|
Mastercard1
|
1,261
|
2.7
|
Hays
|
1,138
|
2.5
|
Rentokil Initial
|
844
|
1.8
|
SGS1
|
671
|
1.5
|
|
---------------
|
---------------
|
|
3,914
|
8.5
|
|
=========
|
=========
|
Media
|
|
|
RELX
|
2,470
|
5.3
|
Pearson
|
718
|
1.5
|
|
---------------
|
---------------
|
|
3,188
|
6.8
|
|
=========
|
=========
|
Mining
|
|
|
Rio Tinto
|
2,281
|
4.9
|
Anglo American
|
627
|
1.4
|
|
---------------
|
---------------
|
|
2,908
|
6.3
|
|
=========
|
=========
|
Household Goods & Home Construction
|
|
|
Reckitt
|
1,271
|
2.7
|
Taylor Wimpey
|
803
|
1.7
|
Berkeley Group
|
758
|
1.6
|
|
---------------
|
---------------
|
|
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 Holdings2
|
–
|
–
|
|
---------------
|
---------------
|
|
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
30 April 2024
(unaudited)
|
Six months ended
30 April 2023
(unaudited)
|
Year ended
31 October 2023
(audited)
|
|
Notes
|
Revenue
£’000
|
Capital
£’000
|
Total
£’000
|
Revenue
£’000
|
Capital
£’000
|
Total
£’000
|
Revenue
£’000
|
Capital
£’000
|
Total
£’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
up share
capital
£’000
|
Share
premium
account
£’000
|
Capital
redemption
reserve
£’000
|
Capital
reserve
£’000
|
Special
reserve
£’000
|
Revenue
reserve
£’000
|
Total
£’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 paid1
|
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 paid2
|
|
–
|
–
|
–
|
–
|
–
|
(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 paid3
|
|
–
|
–
|
–
|
–
|
–
|
(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
2024
(unaudited)
£’000
|
30 April
2023
(unaudited)
£’000
|
31 October
2023
(audited)
£’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
ended
30 April
2024
(unaudited)
£’000
|
Six months
ended
30 April
2023
(unaudited)
£’000
|
Year
ended
31 October
2023
(audited)
£’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 Fund1
|
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
ended
30 April
2024
(unaudited)
£’000
|
Six months
ended
30 April
2023
(unaudited)
£’000
|
Year
ended
31 October
2023
(audited)
£’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
30 April 2024
(unaudited)
|
Six months ended
30 April 2023
(unaudited)
|
Year ended
31 October 2023
(audited)
|
|
Revenue
£’000
|
Capital
£’000
|
Total
£’000
|
Revenue
£’000
|
Capital
£’000
|
Total
£’000
|
Revenue
£’000
|
Capital
£’000
|
Total
£’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
ended
30 April
2024
(unaudited)
£’000
|
Six months
ended
30 April
2023
(unaudited)
£’000
|
Year
ended
31 October
2023
(audited)
£’000
|
Allocated to revenue:
|
|
|
|
Custody fees
|
–
|
–
|
1
|
Depositary fees
|
2
|
2
|
5
|
Audit fees1
|
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 back2
|
(10)
|
(1)
|
(3)
|
Other administration costs
|
16
|
15
|
35
|
|
---------------
|
---------------
|
---------------
|
|
160
|
161
|
317
|
|
=========
|
=========
|
=========
|
Allocated to capital:
|
|
|
|
Custody transaction costs3
|
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
ended
30 April
2024
(unaudited)
|
Six months
ended
30 April
2023
(unaudited)
|
Year
ended
31 October
2023
(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
30 April
2024
(unaudited)
|
As at
30 April
2023
(unaudited)
|
As at
31 October
2023
(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
ended 30 April
2024
(unaudited)
|
Six months
ended 30 April
2023
(unaudited)
|
Year ended
31 October
2023
(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
shares
number
|
Treasury
shares
number
|
Total
shares
number
|
Nominal
value
£’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
£’000
|
Level 2
£’000
|
Level 3
£’000
|
Total
£’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
20 June 2024
|
Ordinary shares
30 April 2024
|
Ordinary shares
31 October 2023
|
Graeme Proudfoot (Chairman)
|
60,000
|
60,000
|
60,000
|
Nicholas Gold
|
43,175
|
43,175
|
43,175
|
Charles Worsley1
|
987,539
|
987,539
|
987,539
|
Win Robbins2
|
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
held by Related
BlackRock Funds
|
Total % of shares
held by Significant Investors
who are not affiliates of
BlackRock Group or
BlackRock, Inc.
|
Number of
Significant Investors
who are not affiliates of
BlackRock Group or
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