BlackRock Greater Europe Investment Trust Plc - Half-year Report
LEI: 5493003R8FJ6I76ZUW55
Half Yearly Financial Report
Performance record
As at As at
29 February 31 August
2024 2023
Net assets (£’000)1 662,619 565,710
Net asset value per ordinary share (pence) 658.25 560.11
Ordinary share price (mid-market) (pence) 629.00 527.00
Discount to cum income net asset value2 4.4% 5.9%
FTSE World Europe ex UK Index 2,100.60 1,916.71
========= =========
For the six For the six
months ended months ended
29 February 28 February
2024 2023
Performance (with dividends reinvested)
Net asset value per share2 18.6% 16.6%
Ordinary share price2 20.5% 15.9%
FTSE World Europe ex UK Index 9.6% 14.6%
========= =========
For the period For the period
since inception since inception
to 29 February to 28 February
2024 2023
Performance since inception (with dividends
reinvested)
Net asset value per share2 814.2% 654.1%
Ordinary share price2 784.3% 626.0%
FTSE World Europe ex UK Index 431.2% 379.7%
========= =========
For the six For the six
months ended months ended
Change
29 February 28 February %
2024 2023
Revenue
Net profit on ordinary activities after 63 22 +186.4
taxation (£’000)
Revenue earnings per ordinary share (pence)3 0.06 0.02 +200.0
Dividends (pence)
Interim dividend 1.75 1.75 -
========= ========= =========
1 The change in net assets reflects payments for shares repurchased into treasury, portfolio movements and dividends paid.
2 Alternative Performance Measures, see Glossary contained within the Half Yearly Financial Report.
3 Further details are given in the Glossary contained within the Half Yearly Financial Report.
Chairman’s Statement
Overview
The first six months of this year resulted in a strong performance for European equities and we comfortably exceeded the performance of the FTSE World Europe ex
In general, European equities have been strong performers in 2023, defying concerns that the region might slip into recession. In fact, 2023 turned out much better than most market participants had expected despite changes in
Initial weakness in January, following strong markets during the fourth quarter of 2023, was soon replaced by solid earnings reports from European large cap stocks, as well as evidence of a strong underlying economy. The robust corporate earnings, combined with positive outlook statements from companies and support from reasonably resilient macroeconomic data, drove markets higher in February.
Performance
Against this backdrop, I am pleased to report that over the six months ended
Since the period end to
Revenue earnings and dividends
The Company’s revenue return per share for the six-month period ended
The Board has declared an interim dividend of 1.75p (2023: 1.75p) per share. The dividend will be paid on
Management of share rating
Investor sentiment and discounts have been influenced by various external factors and uncertainties, including rising interest rates, and discounts have widened generally across the investment trust sector. The average discount for the AIC Europe sector was 9.2% over the six months ended
As part of this program, the Company bought back 336,310 shares for a total consideration of £1,914,000 over the six months under review. Since
All shares were bought back at a discount to the prevailing NAV and the buy backs were therefore accretive to existing shareholders. All shares bought back have been placed in treasury for future reissue.
Tender offers
The Directors of the Company have the discretion to make semi-annual tender offers at the prevailing NAV less 2%, for up to 20% of the issued share capital in May and November of each year. The Board announced on
Despite a challenging period for discounts, it is pleasing that the Company’s share rating has been relatively stable versus the market and peer group and the Board believes that the buyback activity undertaken has been beneficial in reducing the volatility of the Company’s share rating and in shareholders’ interests. As the Company’s discount was trading at 5.3% on
The Board will continue to monitor the Company’s discount and may use the Company’s share buyback powers to ensure that the share price does not go to an excessive discount to the underlying NAV. The Board remains committed to supporting the share price to a narrow discount or premium to its NAV.
Outlook
The outlook for
However, our portfolio managers are cautiously optimistic as the
Against this backdrop, our portfolio managers remain positive on the outlook for European equities. The Board is also confident that they will continue to remain selective and focus on issuer fundamentals in a concentrated, high conviction portfolio.
Investment Manager’s Report
Market review
The Company’s share price and underlying net asset value per share (NAV) rose by 20.5% and 18.6%, respectively, over the six months to
European equities delivered very strong returns over the last six months despite a backdrop of cautious sentiment given concerns over a potential recession, weaker
Our optimism entering the period – reflected in a pro-cyclical portfolio positioning – was rewarded as inflation fell closer to central bank targets and wages began growing in real terms, while corporate earnings came through better than the market had expected. Technology, industrials, financials and consumer discretionary sectors led the strong market rally, while defensive sectors including consumer staples and utilities underperformed.
Portfolio overview
The portfolio’s positioning in the technology sector, semiconductors in particular, delivered the strongest contribution to returns over the period. The industry sells into a range of different end markets and applications including autos, phones, PCs, gaming as well as industrial applications like 5G, cloud infrastructure and Artificial Intelligence (AI).
Over the past six months, there has been increasing evidence of the positive impact from AI on the semiconductor sector as material orders from large technology companies started to come through. We seem to be entering a semiconductor upcycle, which tends to have duration and can produce significant opportunities for growth. The scale of capital expenditure (capex) increases that many technology firms have committed to in order to build out their AI infrastructure and capabilities has been impressive. This is not solely a US phenomenon and we believe we own European stocks that will see significant benefits from this investment spend.
BE Semiconductor was the top contributor to relative returns over the period. The company is one of the leading providers of packaging solutions such as hybrid bonding, which is set to become an increasingly important technology in enabling semiconductor chips to continue getting smaller, yet more powerful and more energy efficient. Other semiconductor businesses in the portfolio including ASM International and ASML were also amongst the best performers.
A positive contribution also came from areas that we consider ‘capex winners’. After a long period of under-investment from many corporates post the global financial crisis, we believe we are at the beginning of significant investment spend to come. Companies enabling the energy transition, the electrification of our economies or that help re-shore supply chains can truly benefit from these transformations. The portfolio’s position in Schneider Electric (Schneider) was amongst the best performers, benefiting from these trends. Around 75% of Schneider’s sales come from their energy management division. Schneider plays a key role in emission reduction initiatives due to their solutions that help make public and private buildings more energy efficient. On the infrastructure side, Schneider holds a leading position in medium voltage solutions that allow for making power grids smarter, more energy efficient and capable to deal with renewable energy. That infrastructure segment is expected to grow at a double-digit rate over the next few years.
Within luxury, concerns around deteriorating demand trends and operating deleverage were disproved by the most established brands selling to high-end consumers. The portfolio’s position in Hermès contributed positively given strong Q4 results and upbeat commentary around 2024 trading so far. Elsewhere in the sector, luxury sportscar maker Ferrari also impressed with strong results as the brand continues to see strong demand worldwide across models. The order book is full, giving investors earnings visibility out to 2026 whilst revenue from personalisation options is hitting record highs.
Finally,
Outside of
Shares in logistics company
DSV
were the single largest detractor. The main weakness came from the company’s announcement to enter a
Other changes to the portfolio were limited. We added Linde , a leader in industrial gases with strong pricing power, geared into structural growth in energy transition and capex spend and with diversified end-markets and low financial leverage. Royal Unibrew was sold after a prolonged period of weaker volumes and a disappointing performance from one of its recently acquired brands.
Outlook
Looking to the future we remain cautiously optimistic as inflation is trending down and the economy appears resilient, even with interest rates at current levels. Financial conditions have already started to ease and mortgage rates in many European countries are already falling. Leverage in the corporate sector is low, margins are strong and the end of the destocking cycle is in sight with a positive inflection to come.
STEFAN GRIES AND
Ten largest investments
Together, the Company’s ten largest investments represented 52.2% of the Company’s portfolio as at
1
Health Care company
Market value: £62,558,000
Share of investments: 8.8%
2
ASML
(2023: 3rd)
Technology company
Market value: £52,062,000
Share of investments: 7.3%
ASML is a Dutch company specialising in photolithography systems for the semiconductor industry. The company is at the forefront of technological change, investing in leading research and development to capture the structural growth opportunity coming from growth in mobile devices and microchip components. High barriers to entry within the industry give ASML a protected position with strong pricing power allowing growth in margins.
3
LVMH
(2023: 2nd)
Consumer Discretionary company
Market value: £44,228,000
Share of investments: 6.2%
LVMH is a French multinational corporation specialising in luxury goods. The group has a strong and well-diversified portfolio of luxury brands ranging from handbags to spirits to cosmetics. LVMH’s business model enjoys high barriers to entry due to the heritage, provenance and exquisite quality of its product offering. Its consistent brand investment through economic cycles has helped to spur brand desirability and allowed for significant pricing power.
4
RELX
(2023: 4th)
Consumer Discretionary company
Market value: £43,697,000
Share of investments: 6.2%
RELX is a multinational information and analytics company with high barriers to entry in most of its divisions, including scientific publishing. Their capital light business model enables a high rate of cash conversion with repeat subscription-based revenues. The business benefits from increasing usage of data globally supporting their data analytics business.
5
BE Semiconductor
(2023: 9th)
Technology company
Market value: £34,977,000
Share of investments: 4.9%
BE Semiconductor is a Dutch supplier of semiconductor assembly equipment. The company can continue to grow its market share of an overall growing market given its best-in-class position to capture the advanced packaging segment of the assembly market. The chip makers will have to rely on more innovative packaging solutions (e.g. hybrid bonding) to continue to improve chip efficiency (faster processing, lower power consumption) while also keeping control over manufacturing costs.
6
Hermès
(2023: 7th)
Consumer Discretionary company
Market value: £30,492,000
Share of investments: 4.3%
Hermès is a French luxury design house specialising in leather goods, lifestyle accessories, home furnishings, perfumery, jewellery, watches and high-end clothing. With good brand management and craftsmanship, Hermès products are supply constrained and the company enjoys strong earnings visibility as some of its most iconic products are sold on allocation via waiting lists. Hermès has been run in a conservative fashion for generations with strategic decisions taken with the longest of timeframes.
7
Ferrari
(2023: 11th)
Consumer Discretionary company
Market value: £27,199,000
Share of investments: 3.8%
Ferrari is an Italian luxury sports car manufacturer emphasising exclusivity, performance and quality globally, with a strong focus on innovation and delivering unique driving experiences to its clientele. There is a lot of excitement for 2024 as limited release models are being introduced including the SF90 XX Stradale, followed by the Spider in the second quarter of 2024. Both cars are expected to come at higher price points that will be additive to Ferrari’s overall revenue mix. Demand will remain strong beyond 2024, with the company’s order book already sold out up to 2026.
8
Safran
(2023: 10th)
Industrials company
Market value: £26,997,000
Share of investments: 3.8%
Safran is a French multinational supplier of aerospace, defence and security systems. The industry has emerged from a heavy investment period and Safran is well-placed to benefit from continued strength in its best in class after-market business and strong execution in its LEAP engine program which should drive growth for the next decade.
9
ASM International
(2023: 13th)
Technology company
Market value: £24,935,000
Share of investments: 3.5%
ASM International is a Dutch international company that designs and manufactures equipment and process solutions to produce semiconductor devices for wafer processing. The company aims to create sustainable, long-term value for their stakeholders and a degree of recovery in logic/foundry. The company is also set to benefit from the increasing importance of power emerging technologies such as Artificial Intelligence (AI), where we’ve seen a step change with the roll out of generative AI tools in 2023.
10
Partners Group
(2023: 19th)
Financials company
Market value: £24,126,000
Share of investments: 3.4%
Partners Group is a Swiss-based global private markets firm. Partners Group specialise in private equity, although also offer private debt, private real estate and private infrastructure to clients. Their aim is to provide clients with solutions, providing them with a diverse portfolio of alternatives which suit their needs. With the funding environment easing, Partners Group is well set up to raise assets under management (AUM) in the alternatives space. On top of this, the dividend yield is 4% and the company has an impressive historic dividend payout policy. In the second half of 2023 the company started seeing an uptrend towards more normalised conversion periods, with demand expected to be carried over into the next few years.
All percentages reflect the value of the holding as a percentage of total investments.
Arrows indicate the change in relative ranking of the position in the portfolio compared to its ranking as at
Portfolio analysis as at
% FTSE
Central World
Eastern % % Europe
% % % % % % % % % % Europe & Portfolio Portfolio ex UK
France Switzerland Ireland Germany Sweden Netherlands Denmark Belgium Spain Italy Other 29.02.24
29.02.24 31.08.23
Basic Materials – – – – – 2.5 – – – – 2.4 4.9 2.6 4.4
Consumer 13.4 – – – – – – – – 3.8 6.2 23.4 20.7 13.8
Discretionary
Consumer Staples – 1.2 – – – – – – – – – 1.2 4.4 7.6
Energy – – – – – – – – – – – – – 3.9
Financials – 3.4 2.8 – – – – 1.8 – – 0.6 8.6 8.1 18.1
Health Care – 4.2 – – – – 10.9 – – – – 15.1 18.0 15.7
Industrials 7.1 4.9 2.4 1.7 3.5 2.1 2.0 – – – – 23.7 22.7 18.4
Real Estate – – – – – – – – – – – – – 1.0
Technology 1.7 3.3 – – 2.4 15.7 – – – – – 23.1 23.5 10.5
Telecommunications – – – – – – – – – – – – – 2.9
Utilities – – – – – – – – – – – – – 3.7
% Portfolio 22.2 17.0 5.2 1.7 5.9 20.3 12.9 1.8 – 3.8 9.2 100.0 – –
29.02.24
% Portfolio 18.8 19.9 5.4 1.3 4.6 17.3 17.9 1.9 2.4 4.2 6.3 – 100.0 –
31.08.23
FTSE World Europe 22.1 18.4 0.5 16.6 6.5 10.9 6.6 1.6 4.8 4.8 7.2 – – 100.0
ex UK 29.02.24
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Percentages in the table above are a % of total investments.
Investments as at
Market
Country value % of
of operation £’000 investments
Industrials
Safran France 26,997 3.8
Schneider Electric France 23,550 3.3
Sika Switzerland 20,420 2.9
Kingspan Ireland 17,041 2.4
Atlas Copco Sweden 16,801 2.4
Adyen Netherlands 14,897 2.1
DSV Panalpina Denmark 14,324 2.0
Rational Germany 12,303 1.7
Epiroc Sweden 7,844 1.1
Belimo Switzerland 7,373 1.0
VAT Group Switzerland 7,296 1.0
--------------- ---------------
168,846 23.7
========= =========
Consumer Discretionary
LVMH France 44,228 6.2
RELX United Kingdom 43,697 6.2
Hermès France 30,492 4.3
Ferrari Italy 27,199 3.8
L'Oreal France 20,844 2.9
Fix Price Group* Russia 1 –
--------------- ---------------
166,461 23.4
========= =========
Technology
ASML Netherlands 52,062 7.3
BE Semiconductor Netherlands 34,977 4.9
ASM International Netherlands 24,935 3.5
STMicroelectronics Switzerland 23,313 3.3
Hexagon Sweden 17,265 2.4
ALTEN Group France 12,097 1.7
--------------- ---------------
164,649 23.1
========= =========
Health Care
Novo Nordisk Denmark 62,558 8.8
Lonza Group Switzerland 19,532 2.7
ChemoMetec Denmark 14,868 2.1
Straumann Switzerland 10,896 1.5
--------------- ---------------
107,854 15.1
========= =========
Financials
Partners Group Switzerland 24,126 3.4
Allied Irish Banks (AIB) Ireland 20,189 2.8
KBC Groep Belgium 12,353 1.8
Allfunds Group United Kingdom 4,504 0.6
Sberbank* Russia – –
--------------- ---------------
61,172 8.6
========= =========
Basic Materials
IMCD Netherlands 17,426 2.5
Linde United States 17,033 2.4
--------------- ---------------
34,459 4.9
========= =========
Consumer Staples
Lindt Switzerland 8,529 1.2
--------------- ---------------
8,529 1.2
========= =========
Energy
Lukoil* Russia – –
========= =========
Total investments 711,970 100.0
========= =========
*
During the year ended
All investments are in ordinary shares unless otherwise stated. The total number of investments held at
Industry classifications in the table above are based on the Industrial Classification Benchmark standard for categorisation of companies by industry and sector.
As at
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:
· Counterparty;
· Investment performance;
· Legal & regulatory compliance;
· Market;
· Operational;
· Financial; and
· Marketing.
The Board reported on the principal risks and uncertainties faced by the Company in the Annual Report and Financial Statements for the year ended
In the view of the Board, there have not been any changes to the fundamental nature of the principal risks and uncertainties since the previous report and these are equally applicable to the remaining six months of the financial year as they were to the six months under review.
Going concern
The Directors, having considered the nature and liquidity of the portfolio, the Company’s investment objective and the Company’s projected income and expenditure, are satisfied that the Company has adequate resources to continue in operational existence for the foreseeable future and is financially sound. The Board is mindful of the continuing uncertainty surrounding the current environment of heightened geopolitical risk given the war in
The Company has a portfolio of investments which are predominantly readily realisable and is able to meet all of its liabilities from its assets and income generated from these assets. Accounting revenue and expense forecasts are maintained and reported to the Board regularly and it is expected that the Company will be able to meet all its obligations. The Investment Manager generally aims to be fully invested and it is anticipated that gearing will not exceed 15% of net asset value (NAV) at the time of drawdown of the relevant borrowings. Borrowings under the overdraft facility shall at no time exceed £75 million or 15% of the Company’s net asset value (whichever is lower) and this covenant was complied with during the period. At
Related party disclosure and transactions with the Manager
Directors’ responsibility statement
The Disclosure Guidance and Transparency Rules of the
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 applicable
· 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.
This 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
FOR AND ON BEHALF OF THE BOARD
Income Statement for the six months ended
Six months ended Six months ended Year ended
29 February 2024 28 February 2023 31 August 2023
(unaudited) (unaudited)
(audited)
Revenue Capital Total Revenue Capital Total Revenue Capital Total
Notes £’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000
Gains on
investments
held at
fair value – 106,000 106,000 – 80,774 80,774 – 87,830 87,830
through
profit or
loss
Gains on
foreign – 423 423 – 106 106 – 1,149 1,149
exchange
Income from
investments
held at
fair value 3 1,252 – 1,252 930 – 930 10,699 – 10,699
through
profit or
loss
--------------- --------------- --------------- --------------- --------------- --------------- --------------- --------------- ---------------
Total 1,252 106,423 107,675 930 80,880 81,810 10,699 88,979 99,678
income
========= ========= ========= ========= ========= ========= ========= ========= =========
Expenses
Investment
management 4 (470) (1,879) (2,349) (419) (1,675) (2,094) (888) (3,554) (4,442)
fee
Other
operating 5 (406) (8) (414) (424) (61) (485) (1,934) (89) (2,023)
expenses
--------------- --------------- --------------- --------------- --------------- --------------- --------------- --------------- ---------------
Total
operating (876) (1,887) (2,763) (843) (1,736) (2,579) (2,822) (3,643) (6,465)
expenses
========= ========= ========= ========= ========= ========= ========= ========= =========
Net profit
on ordinary
activities
before 376 104,536 104,912 87 79,144 79,231 7,877 85,336 93,213
finance
costs and
taxation
Finance (184) (736) (920) (14) (57) (71) (167) (665) (832)
costs
--------------- --------------- --------------- --------------- --------------- --------------- --------------- --------------- ---------------
Net profit
on ordinary
activities 192 103,800 103,992 73 79,087 79,160 7,710 84,671 92,381
before
taxation
Taxation (129) – (129) (51) – (51) (790) – (790)
charge
--------------- --------------- --------------- --------------- --------------- --------------- --------------- --------------- ---------------
Net profit
on ordinary
activities 7 63 103,800 103,863 22 79,087 79,109 6,920 84,671 91,591
after
taxation
========= ========= ========= ========= ========= ========= ========= ========= =========
Earnings
per
ordinary 7 0.06 102.96 103.02 0.02 78.20 78.22 6.85 83.77 90.62
share
(pence)
========= ========= ========= ========= ========= ========= ========= ========= =========
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
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
Called Share Capital
up share premium redemption Special Capital Revenue
capital account reserve reserve reserves reserve Total
Note £’000 £’000 £’000 £’000 £’000 £’000 £’000
For the six
months ended
29 February
2024
(unaudited)
At 31 August 117 85,325 130 68,558 400,631 10,949 565,710
2023
Total
comprehensive
income:
Net profit
for the – – – – 103,800 63 103,863
period
Transactions
with owners,
recorded
directly to
equity:
Ordinary
shares – – – (1,904) – – (1,904)
repurchased
into treasury
Share buyback – – – (10) – – (10)
costs
Dividends 6 – – – – – (5,040) (5,040)
paid1
--------------- --------------- --------------- --------------- --------------- --------------- ---------------
At 29 117 85,325 130 66,644 504,431 5,972 662,619
February 2024
========= ========= ========= ========= ========= ========= =========
For the six
months ended
28 February
2023
(unaudited)
At 31 August 117 85,325 130 71,572 315,960 10,695 483,799
2022
Total
comprehensive
income:
Net profit
for the – – – – 79,087 22 79,109
period
Transactions
with owners,
recorded
directly to
equity:
Ordinary
shares – – – (3,001) – – (3,001)
repurchased
into treasury
Share buyback – – – (13) – – (13)
costs
Dividends 6 – – – – – (4,899) (4,899)
paid2
--------------- --------------- --------------- --------------- --------------- --------------- ---------------
At 28 117 85,325 130 68,558 395,047 5,818 554,995
February 2023
========= ========= ========= ========= ========= ========= =========
For the year
ended 31
August 2023
(audited)
At 31 August 117 85,325 130 71,572 315,960 10,695 483,799
2022
Total
comprehensive
income:
Net profit – – – – 84,671 6,920 91,591
for the year
Transactions
with owners,
recorded
directly to
equity:
Ordinary
shares – – – (3,001) – – (3,001)
repurchased
into treasury
Share buyback – – – (13) – – (13)
costs
Dividends 6 – – – – – (6,666) (6,666)
paid3
--------------- --------------- --------------- --------------- --------------- --------------- ---------------
At 31 August 117 85,325 130 68,558 400,631 10,949 565,710
2023
========= ========= ========= ========= ========= ========= =========
1
Final dividend paid in respect of the year ended
2
Final dividend paid in respect of the year ended
3
Interim dividend paid in respect of the year ended
For information on the Company’s distributable reserves, please refer to note 10 below.
Balance Sheet as at
29 February 28 February 31 August
2024 2023 2023
(unaudited) (unaudited) (audited)
Notes £’000 £’000 £’000
Fixed assets
Investments held at fair
value through profit or 11 711,970 580,767 594,727
loss
Current assets
Current tax asset 2,446 1,673 2,350
Debtors 7,017 26 1,517
--------------- --------------- ---------------
Total current assets 9,463 1,699 3,867
========= ========= =========
Creditors – amounts
falling due within one
year
Bank overdraft (55,509) (23,869) (27,617)
Other creditors (3,305) (3,602) (5,267)
--------------- --------------- ---------------
Total current liabilities (58,814) (27,471) (32,884)
--------------- --------------- ---------------
Net current liabilities (49,351) (25,772) (29,017)
--------------- --------------- ---------------
Net assets 662,619 554,995 565,710
========= ========= =========
Capital and reserves
Called up share capital 9 117 117 117
Share premium account 85,325 85,325 85,325
Capital redemption reserve 130 130 130
Special reserve 66,644 68,558 68,558
Capital reserves 504,431 395,047 400,631
Revenue reserve 5,972 5,818 10,949
--------------- --------------- ---------------
Total shareholders’ funds 662,619 554,995 565,710
========= ========= =========
Net asset value per 7 658.25 549.50 560.11
ordinary share (pence)
========= ========= =========
Statement of Cash Flows for the six months ended
Six months Six months Year
ended ended ended
29 February 28 February 31 August
2024 2023 2023
(unaudited) (unaudited) (audited)
£’000 £’000 £’000
Operating activities
Net profit on ordinary 103,992 79,160 92,381
activities before taxation
Add back finance costs 920 71 832
Gains on investments held at
fair value through profit or (106,000) (80,774) (87,830)
loss
Gains on foreign exchange (423) (106) (1,149)
Sale of investments held at fair 85,303 39,221 86,863
value through profit or loss
Purchase of investments held at
fair value through profit or (103,559) (61,398) (115,924)
loss
Decrease/(increase) in debtors 125 194 (25)
(Decrease)/increase in other (967) 858 1,231
creditors
Taxation on investment income (608) (260) (1,754)
Interest paid (920) (71) (832)
Refund of withholding tax 479 455 533
reclaims
--------------- --------------- ---------------
Net cash used in operating (21,658) (22,650) (25,674)
activities
========= ========= =========
Financing activities
Ordinary shares repurchased into (1,617) (3,592) (3,592)
treasury
Dividends paid (5,040) (4,899) (6,666)
--------------- --------------- ---------------
Net cash used in financing (6,657) (8,491) (10,258)
activities
========= ========= =========
Decrease in cash and cash (28,315) (31,141) (35,932)
equivalents
Cash and cash equivalents at the (27,617) 7,166 7,166
start of the period/year
Effect of foreign exchange rate 423 106 1,149
changes
--------------- --------------- ---------------
Cash and cash equivalents at the (55,509) (23,869) (27,617)
end of the period/year
========= ========= =========
Comprised of:
Bank overdraft (55,509) (23,869) (27,617)
--------------- --------------- ---------------
(55,509) (23,869) (27,617)
========= ========= =========
Notes to the Financial Statements for the six months ended
1. Principal activity
The principal activity of the Company is that of an investment trust company within the meaning of Section 1158 of the Corporation Tax Act 2010.
2. Basis of preparation
The 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
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
3. Income
Six months Six months Year
ended ended ended
29 February 28 February 31 August
2024 2023 2023
(unaudited) (unaudited) (audited)
£’000 £’000 £’000
Investment income:
UK dividends – – 764
Overseas dividends 1,252 929 9,907
Overseas special dividends – – 27
--------------- --------------- ---------------
Total investment income 1,252 929 10,698
========= ========= =========
Other income:
Interest received – 1 1
--------------- --------------- ---------------
Total income 1,252 930 10,699
========= ========= =========
Dividends and interest received in cash during the period amounted to £758,000 and £nil respectively (six months ended
No special dividends have been recognised in capital during the period (six months ended
4. Investment management fee
Six months ended Six months ended Year ended
29 February 2024 28 February 2023 31 August 2023
(unaudited) (unaudited) (audited)
Revenue Capital Total Revenue Capital Total Revenue Capital Total
£’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000
Investment
management 470 1,879 2,349 419 1,675 2,094 888 3,554 4,442
fee
--------------- --------------- --------------- --------------- --------------- --------------- --------------- --------------- ---------------
Total 470 1,879 2,349 419 1,675 2,094 888 3,554 4,442
========= ========= ========= ========= ========= ========= ========= ========= =========
With effect from
Up to and including
The investment management fee is allocated 20% to the revenue account and 80% to the capital account of the Income Statement. There is no additional fee for company secretarial and administration services.
5. Other operating expenses
Six months Six months Year
ended ended ended
29 February 28 February 31 August
2024 2023 2023
(unaudited) (unaudited) (audited)
£’000 £’000 £’000
Allocated to revenue:
Broker fees 24 24 48
Custody fees 27 14 36
Depositary fees 32 32 65
Audit fees1 26 29 57
Legal fees 13 13 26
Registrar’s fees 45 48 97
Directors’ emoluments 89 84 173
Marketing fees 77 46 97
Postage and printing fees 22 35 68
AIC fees 11 11 21
Professional fees 11 43 66
Stock exchange listing fees 12 24 35
Write back of prior year expense (12) – (23)
accruals2
Other administration costs 29 21 24
Provision for doubtful debts3 – – 1,144
--------------- --------------- ---------------
406 424 1,934
========= ========= =========
Allocated to capital:
Custody transaction costs4 8 61 89
--------------- --------------- ---------------
414 485 2,023
========= ========= =========
1 No non-audit services are provided by the Company’s auditors.
2
Relates to postage and printing fees and other administration costs written back in the period (six months ended
3
Provision for doubtful debts relate to dividend income from Sberbank which has not been received due to measures imposed by the Russian authorities in response to the sanctions that have been imposed on
4
For the six month period ended
The direct transaction costs incurred on the acquisition of investments amounted to £191,000 for the six months ended
6. Dividends
The Directors have declared an interim dividend of 1.75p per share for the period ended
In accordance with FRS 102, Section 32 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.
7. 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
29 February 28 February 31 August
2024 2023 2023
(unaudited) (unaudited) (audited)
Net revenue profit attributable 63 22 6,920
to ordinary shareholders (£’000)
Net capital profit attributable 103,800 79,087 84,671
to ordinary shareholders (£’000)
--------------- --------------- ---------------
Total profit attributable to 103,863 79,109 91,591
ordinary shareholders (£’000)
========= ========= =========
Total shareholders’ funds 662,619 554,995 565,710
(£’000)
========= ========= =========
Earnings per share
The weighted average number of
ordinary shares in issue during
the period on which the earnings 100,816,318 101,136,375 101,067,709
per ordinary share was
calculated was:
The actual number of ordinary
shares in issue at the end of
the period on which the net 100,663,851 101,000,161 101,000,161
asset value per ordinary share
was calculated was:
Calculated on weighted average
number of ordinary shares:
Revenue earnings per share 0.06 0.02 6.85
(pence) – basic and diluted
Capital earnings per share 102.96 78.20 83.77
(pence) – basic and diluted
--------------- --------------- ---------------
Total earnings per share (pence) 103.02 78.22 90.62
– basic and diluted
========= ========= =========
As at As at As at
29 February 28 February 31 August
2024 2023 2023
(unaudited) (unaudited) (audited)
Net asset value per share (pence) 658.25 549.50 560.11
Ordinary share price (pence) 629.00 523.00 527.00
========= ========= =========
There were no dilutive securities at
8. Reconciliation of liabilities arising from financing activities
Six months Six months Year
ended ended ended
29 February 28 February 31 August
2024 2023 2023
(unaudited) (unaudited) (audited)
£’000 £’000 £’000
Bank overdraft at beginning of 27,617 182 182
the period/year
Cash flows:
Movement in overdraft 28,256 23,885 27,934
Non cash flows:
Effects of foreign exchange gain (364) (198) (499)
--------------- --------------- ---------------
Bank overdraft at end of the 55,509 23,869 27,617
period/year
========= ========= =========
9. Called up share capital
Ordinary Treasury Total Nominal
shares shares shares value
(unaudited) number number number £’000
Allotted, called
up and fully
paid share
capital
comprised:
Ordinary shares
of 0.1 pence
each:
At 31 August 101,000,161 16,928,777 117,928,938 117
2023
Ordinary shares
repurchased into (336,310) 336,310 – –
treasury
--------------- --------------- --------------- ---------------
At 29 February 100,663,851 17,265,087 117,928,938 117
2024
========= ========= ========= =========
During the six months ended
Since
10. 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 reserves 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 reserves and the revenue reserve may be distributed by way of dividend. The gain on the capital reserve arising on the revaluation of investments held of £247,433,000 (
11. 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 risks are substantially consistent with those disclosed in the previous annual financial statements, with the exception of those outlined below.
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 and overdrafts). 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 page 88 of the Annual Report and Financial Statements for the year ended
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 than 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 Level 1 Level 2 Level 3 Total or loss at 29 £’000 £’000 £’000 £’000February 2024 (unaudited) Equity 711,969 – 1 711,970 investments --------------- --------------- --------------- --------------- Total 711,969 – 1 711,970 ========= ========= ========= =========
Financial assets at fair value through profit Level 1 Level 2 Level 3 Total or loss at 28 £’000 £’000 £’000 £’000February 2023 (unaudited) Equity 580,764 – 3 580,767 investments --------------- --------------- --------------- --------------- Total 580,764 – 3 580,767 ========= ========= ========= =========
Financial assets at fair value through profit Level 1 Level 2 Level 3 Total or loss at 31 £’000 £’000 £’000 £’000August 2023 (audited) Equity 593,785 – 942 594,727 investments --------------- --------------- --------------- --------------- Total 593,785 – 942 594,727 ========= ========= ========= =========
The Company held three Level 3 securities as at
A reconciliation of fair value measurement in Level 3 is set out below.
Level 3 financial assets at fair value through profit or loss
Six months Six months Year
ended ended ended
29 February 28 February 31 August
2024 2023 2023
(unaudited) (unaudited) (audited)
£’000 £’000 £’000
Opening fair value 942 3 3
(Loss)/gain on investments
included in gains on investments (939) – 939
in the Income Statement
Sale of investments included in
gains on investments in the (2) – –
Income Statement
--------------- --------------- ---------------
Closing balance 1 3 942
========= ========= =========
As at
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 risks, including climate change risk, in accordance with the fair value related requirements of the Company’s financial reporting framework.
12. Related party disclosure
The Board consists of five non-executive Directors, all of whom are considered to be independent by the Board. None of the Directors has a service contract with the Company. The Chairman receives an annual fee of £46,500, the Chair of the
As at
Since the period end and up to the date of this report there have been no changes in Directors’ holdings.
The transactions with the Investment Manager and AIFM are stated in note 13.
Significant holdings
The following investors are:
a.
funds managed by the
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 (
As at
Total % of shares held by Number of Significant
Significant Investors who
Total % of shares held by Investors who are not are not affiliates of
Related affiliates of BlackRock Group or
BlackRock Funds BlackRock Group or BlackRock, BlackRock, Inc.
Inc.
1.3 n/a n/a
As at
Total % of shares held by Number of Significant
Significant Investors who
Total % of shares held by Investors who are not are not affiliates of
Related affiliates of BlackRock Group or
BlackRock Funds BlackRock Group or BlackRock, BlackRock, Inc.
Inc.
1.4 n/a n/a
As at
Total % of shares held by Number of Significant
Significant Investors who
Total % of shares held by Investors who are not are not affiliates of
Related affiliates of BlackRock Group or
BlackRock Funds BlackRock Group or BlackRock, BlackRock, Inc.
Inc.
0.9 n/a n/a
13. Transactions with the Investment Manager and AIFM
The investment management fee is levied quarterly based on a tiered basis: 0.85% per annum of the month-end net asset value up to £350 million and 0.75% per annum of the month-end net asset value above £350 million. Up to and including
In addition to the above services, BIM (
During the year, the Manager pays the amounts due to the Directors. These fees are then reimbursed by the Company for the amounts paid on its behalf. As at
The ultimate holding company of the Manager and the Investment Manager is BlackRock, Inc., a company incorporated in
14. Contingent liabilities
There were no contingent liabilities at
15. Publication of non statutory accounts
The financial information contained in this half yearly report does not constitute statutory accounts as defined in Section 435 of the Companies Act 2006. The financial information for the six months ended
The information for the year ended
16. Annual results
The Board expects to announce the annual results for the year ending
EC2N 2DL
For further information please contact:
Sarah Beynsberger, Director, Closed End Funds,
Press enquires:
Tel:
020 7294 3620
E-mail:
BlackRockInvestmentTrusts@lansons.com
or
EdH@lansons.com
END
The Half Yearly Financial Report will also be available on the BlackRock website at
www.blackrock.com/uk/brge
. 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.
